Increased audit costs associated with the launch of Rules 6th Edition in January

[Howie Makem]

I just received my first few quotes for IATF 16949 audits (recerts and surveillance) that will occur in 2025 and beyond. Holy crap, the increase in costs is horrendous! We have over 20 manufacturing locations so we are on a "Corporate Scheme" that allowed a 40% reduction in audit days, plus we are not design responsible so that was another reduction. Now the MAXIMUM reduction, INCLUDING the one for exclusion of Design, is 15%! There are other automatic fees, Audit Report Preparation charges and fees for reviewing corrective actions like there always were, and they have gone up considerably as well. What a money making scam. My quote is about 25% higher per location than it was in the last cycle which is some serious money (remember, everything rounds UP in these calculations for audit time) and also pushes some audits into 6 days duration so that means 2 auditors and the associated extra travel costs. We knew when we saw the draft of the 6th Edition Rules that costs would rise, but this is an absolute rip-off. Changing CB's isn't likely to help (that's expensive too, especially with a lot of manufacturing plant locations) as they will all be doing this starting January 1, 2025.

 

[Jen Kirley]

Howie, I am sorry. You would be in a very large group to feel the way you do about certification being a money making scheme.

I haven't heard about these changes because I don't do 16949. I can only point out that the people making more money are not the ones dictating changes to audit time reduction. I guess you know that CBs don't decide this stuff, they are required to adhere to the 6th Edition of IATF 16949 Rules, which was published on 31 March, 2024 - supposed to go into effect 01 January, 2025.

Disclaimer: I am affiliated with DQS.

 

[Sidney Vianna]

Preparation charges and fees for reviewing corrective actions like there always were, and they have gone up considerably as well.

Not all CB’s have the same fee structure. Some of them use the Spirit Airlines approach nickeling and dimeing you. While the IATF Scheme makes it difficult to transfer certificates between CB’s, nothing strikes more fear to an account manager at the CB, responsible for a sizable client with 20 sites, than “…we will have to put this out for competitive bidding…”

 

[Randy]

Duhhhhhhhhhhhh, are you keeping track of rising travel costs? My airfares to and from some locals are upwards of 50% more in the last 4 years or so, hotels are probably 25%-40% or more as are food costs, and gas for the car depending on where I am at the time anywhere from $3.00-$6.00 per gallon. Depending on whether or not you're paying costs inclusive or exclusive, the economy and what it takes to operate within it on a profit-making basis is not stagnant.

Sidney is right about fee structures, I don't get involved with that nor do I wish to, I just deliver the work within the required duration period.

pushes some audits into 6 days duration so that means 2 auditors and the associated extra travel costs.

OK I'm not familiar with the scheme requirements, I don't do 16949 either (I've proof my parents were married at least 1 year prior to my birth), but if some of the same rules apply as they do 9-14-45, 20% of that time can be used for report writing, planning, etc and that can be done offsite, so 6 days x 8 hours = 48 hours x 0.8 (-20%) = 38.4 hours (rounded up to 38.5 hours onsite/9.5 hours offsite) ....The lazy auditor can write his report on Saturday or whatever (As I'm scheduled to do this week, as I did last week and so on). Actually while in the hotel he can be putting the report together every night for a couple hours each night. Besides, you're lucky you're not getting billed for the actual auditor time for each of your audits (if your auditor isn't so rude as to type while interviewing you or anyone else.....never have, never will, the client is paying for my attention).

I could go on but I've got to stop, I've a report to work on, in my hotel room so that I actually don't have to continue on Saturday. (Report writing time 8-12 hours each depending. Tech review failures, minor @ 1-2 a year at the most)

 

[AMIT BALLAL]

I just received my first few quotes for IATF 16949 audits (recerts and surveillance) that will occur in 2025 and beyond. Holy crap, the increase in costs is horrendous! We have over 20 manufacturing locations so we are on a "Corporate Scheme" that allowed a 40% reduction in audit days, plus we are not design responsible so that was another reduction. Now the MAXIMUM reduction, INCLUDING the one for exclusion of Design, is 15%! There are other automatic fees, Audit Report Preparation charges and fees for reviewing corrective actions like there always were, and they have gone up considerably as well. What a money making scam. My quote is about 25% higher per location than it was in the last cycle which is some serious money (remember, everything rounds UP in these calculations for audit time) and also pushes some audits into 6 days duration so that means 2 auditors and the associated extra travel costs. We knew when we saw the draft of the 6th Edition Rules that costs would rise, but this is an absolute rip-off. Changing CB's isn't likely to help (that's expensive too, especially with a lot of manufacturing plant locations) as they will all be doing this starting January 1, 2025.

Small correction. A maximum reduction of 30% (not 15%) is possible (per IATF rules 6th edition). And generally, audit report preparation fees should be part of those man-days only. Yes, there will be an increase in Man-days and overall costs for sure.
Collect quotes from other CBs, compare and negotiate- preferably based on per Man-day price. That's all we can do.

 

[ChrisM]

What a money making scam. My quote is about 25% higher per location than it was in the last cycle which is some serious money.....

Isn't your own employer in business to make money??
Have you not noticed that labor costs, travel and hotel costs etc have all increased somewhat over the past few years? It's got to the point in Europe where it affects where I can go, and for how long, on holiday for example.... and yes our audit fees have increased over the past few years too - and an audit cycle is typically 3 years, so pricing that was laid down 3 years ago will need significant revision to take account of inflationary pressures and actions

 

[Howie Makem]

I think Randy and ChrisM are missing my point. The increases I'm talking about are based solely on the changes between Rules 5th and Rules 6th. Travel charges (airfare, lodging, food, rental car, etc.) have always been passed on directly to the client company (usually with a 5-10% markup for "administrative fee") for any CB I have ever worked with and those costs went up long before the implementation date of Rules 6th Edition. We are ALREADY paying for those increases and have been for at least 2 years now. I understand that. Labor costs have gone up too, as ChrisM stated, but the daily rate is where that comes in, not the audit duration. My gripe is that automotive suppliers that have 20 or more locations and exclude design have been saddled with an automatic 20% increase in audit days, which are by far the largest cost in any IATF quote. Under Rules 5th we are allowed a 40% reduction for 20 or more plants and an additional 10% reduction for design exclusion for 50% total, and now under the 6th Edition it's 15% for design exclusion and 15% max for any other reductions for a total of 30%. It's a cash grab, plain and simple, charged only to the larger suppliers. The company I work for will pay over $275,000 this year to our CB for IATF 16949 audit services so the difference in costs based on the audit days alone is likely to be over $50K.

 

[Jen Kirley]

Howie,

I don't feel sure we will ever enjoy transparency into exactly why the reduction rules were changed for IATF Rules 6th Edition. The official rationale will likely be similar to the past, to "enhance the overall integrity of the certification process." I do know that IAOB has oversight of IATF, and neither of these directly profit from the increased audit time.

I am not affiliated with LRQA.

 

[Randy]

Whoa, you're getting charged for stuff that isn't audited? That's a heavy load of dino dung! I'm trying to come up with some phrases that won't get reported as naughty, unkind or rude. You're paying for work not being done because you're exempted from it? I'll back off a bit and go bang my noggin against a wall here in the airport.

 

[Howie Makem]

Who is getting changed and for what? Did you mean "charged"? Get ahold of the keyboard there old timer.