Construction Cost Audits
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A Construction Cost Audit is a detailed review of the construction contract documents and audit of the costs billed to the owner. This audit can help determine if there are any inaccurate billings or over payments for the project. The role of a construction cost auditor is not to take the place of an architect, accountant or project manager, but to supplement their services by taking the financial review of the project to the next level.
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The Conrad team will help you or your client save money through our application of in-depth knowledge of construction-related contracts and financial records, ensuring the owner pays only what the contract allows. The types of billing errors uncovered in a review include duplicate invoices, overcharges, arithmetic errors, costs associated with a different project, unreconciled allowances or credits, incorrect fees and/or unauthorized expenditures.
Recovery
Our team has reviewed billions of dollars in billed construction costs. Cost inaccuracies are typically the result of duplicate invoices, labor/materials overcharges, arithmetic errors, costs improperly allocated from different projects, unreconciled allowances or credits, incorrect fees and/or unauthorized expenditures. Regardless of the type of contract, we have earned significant savings for our clients. By quantifying mistakes in the billings and payments, we help owners recover money spent on overpayments.
Cost Reduction/Elimination
When General Contractors and subcontractors become aware a cost audit is initiated, they become more alert against mistakes and miscues. This heightened financial awareness often results in lower reported costs.
Higher Caliber of Contractors/Subcontractors
When General Contractors and subcontractors see clear, specific audit language in a contract, they either compete for the job knowing they will need good, complete records, or decide to move on to “easier” work. This results in higher quality, more capable contractors being attracted to your job.
Better and Complete Records
A project that has undergone a Construction Cost Audit will have better financial records. The audit identifies areas where documentation is incomplete and, in most cases, can get contractors to fill in those gaps.
Assurance of Accurate Billing
Owners cannot be certain they are being billed accurately based solely on the audit conducted by in-house project managers or consultants. If the audit and approval of pay requests and change orders is just a reconciliation of line entries against totals, owners cannot be assured they are paying for actual costs incurred. For example, the majority of the time, paperwork submitted with a change order is based on a quote or an estimate. The actual amount paid for this work may be less than the amount requested on the change order. The only way to be sure is to examine the actual invoices paid by the General Contractor and/or subcontractors. That is why, whether we review records prior to payment or after the fact, we go to the necessary level of detail to verify actual costs. This provides the kind of reassurance owners gain from a cost audit.
Recovery
Our team has reviewed billions of dollars in billed construction costs. Cost inaccuracies are typically the result of duplicate invoices, labor/materials overcharges, arithmetic errors, costs improperly allocated from different projects, unreconciled allowances or credits, incorrect fees and/or unauthorized expenditures. Regardless of the type of contract, we have earned significant savings for our clients. By quantifying mistakes in the billings and payments, we help owners recover money spent on overpayments.
Cost Reduction/Elimination
When General Contractors and subcontractors become aware a cost audit is initiated, they become more alert against mistakes and miscues. This heightened financial awareness often results in lower reported costs.
Higher Caliber of Contractors/Subcontractors
When General Contractors and subcontractors see clear, specific audit language in a contract, they either compete for the job knowing they will need good, complete records, or decide to move on to “easier” work. This results in higher quality, more capable contractors being attracted to your job.
Better and Complete Records
A project that has undergone a Construction Cost Audit will have better financial records. The audit identifies areas where documentation is incomplete and, in most cases, can get contractors to fill in those gaps.
Assurance of Accurate Billing
Owners cannot be certain they are being billed accurately based solely on the audit conducted by in-house project managers or consultants. If the audit and approval of pay requests and change orders is just a reconciliation of line entries against totals, owners cannot be assured they are paying for actual costs incurred. For example, the majority of the time, paperwork submitted with a change order is based on a quote or an estimate. The actual amount paid for this work may be less than the amount requested on the change order. The only way to be sure is to examine the actual invoices paid by the General Contractor and/or subcontractors. That is why, whether we review records prior to payment or after the fact, we go to the necessary level of detail to verify actual costs. This provides the kind of reassurance owners gain from a cost audit.