In 99% of the 900 projects we’ve audited in over 30 years in business, we’ve recovered savings far in excess of the cost of the audit. Here are just a few of our success stories:
Campus Office Buildings
Cost Plus Contract
The project included construction of four office buildings, two parking garages, a commons area and street improvements for a total GMP contract of approximately $700 million. Our cost audit of two prime contractors and four subcontractors resulted in actual project cost savings of $7,350,000 for our Client. The overcharges included overstated costs for craft and staff labor payroll taxes, paid holidays charged direct and included in labor burden, workman’s compensation insurance, purchased materials and equipment, contractors’ owned equipment rentals, general liability insurance, and Business & Occupation taxes.
Power Plant
Target Price Contract
The project Target Price contract was approximately $110 million. We performed an interim audit at 25% complete that identified overcharges of $641,000 which reduced the project cost for our Client. The overcharges included an incorrect data entry invoice amount for concrete, errors in total labor costs charged as a single line item, non-reimbursable home office overhead costs, and overstated wages and related taxes for staff employees.
Regional Headquarters
Cost Reimbursable CM Contract, Fixed Price Subs
The construction management contract was a cost plus GMP agreement in the amount of $63 million. Our audit determined that every subcontractor was back charged 1.5% of the subcontract value for final clean up by the construction manager. The job cost substantiation reflected all subcontract costs at the full sub contract amount. The back charges were not credited to the cost of the work by the construction manager who performed the general clean up and charged their costs to the project resulting in a double charge for clean up. The clean up back charges were credited to the cost of the work resulting in cost savings of $645,000 for our Client.
Power Plant
Target Price Contract – Final Reconciliation
Before closing a contract and making a final payment to the contractor, we performed a final reconciliation of contractor’s project billings to actual cost per contract agreement. The final reconciliation discovered that contractor failed to issue agreed-to audit credit adjustments identified during the interim audit, charged interest on unallocated contingency, and owed liquidated damages to the owner for not completing the project on time. The final reconciliation resulted in a reduction of the final billing to our Client of $1,925,000.
Hospital
Budget Price Contract
We performed an interim contract compliance audit for a Hospital Budget Price contract of $380 million. Our audit identified an erroneous calculation for general liability insurance, incorrectly carried forward amounts on contractor’s payment applications, and overstated costs for union labor fringe benefits resulting in cost reductions of $2,566,000 for our Client.
Office Buildings Lease
The rental rate calculation for total rentable area of 400,000 square feet for a 90 month term included costs of land, tenant improvement allowance, and the percentage of cost for buildings including construction, consultants, permits and fees, leasing and marketing, financing, miscellaneous, property taxes, builders risk insurance, and project administration costs. Our audit identified overstated costs for financing, broker commissions, permits, and builder’s risk insurance that were used to calculate a rental rate per square foot for the leased buildings. The audit resulted in rental rate reduction by $1.07 per square foot yielding a negotiated $3 million in savings for our Client, the tenant, over the lease term.
Sewer Overflow, Tunnel, Shafts & Pipelines
Budget Price Contract
We performed an interim contract compliance audit for the Budget Price (Estimated Reimbursable Cost plus Fixed Fee) of approximately $380 million. The audit disclosed that costs for general liability insurance covered by the Owner Controlled Insurance Program (OCIP) were also charged within the labor burden costs. Staff labor and other costs covered by the Fixed Fee were also charged as reimbursable costs. Correction of these overcharges resulted in $875,000 project cost savings for our Client.
Condominiums
Cost Plus Contract
The project contract price was approximately $43 million. We performed a pre-closeout audit of project costs that identified double charges for holidays and sick leave for staff labor as well as overstated cost for general liability insurance resulting in project cost savings for our Client of $520,000.
Data Center
Cost Plus Contract
The project guaranteed maximum price contract was $182 million. We performed interim and pre-closeout cost audits covering the prime contractor and three cost reimbursable subcontractors. Our audit discovered invoices for other prime contractor projects, overstated costs for craft and staff labor payroll taxes and benefits; overstated costs for labor burden by subcontractors; charged accrued costs for labor, materials and subcontracts; overcharged labor rates for staff; contingency charged to project costs and other errors yielding total project cost savings of $2,295,000.
Tenant Improvements
Cost Plus Contract
We performed a pre-closeout contract cost audit on an office building tenant improvements project of $45 million in contract price. Project audit cost savings for our Client of $847,000 included overstated cost for labor; non-reimbursable costs allocated to the project; double charges for Business & Occupation taxes; overstated cost for subcontractor’s owned equipment rentals; duplicate charges for materials and overstated costs for general liability insurance.
Tenant Improvements
Cost Plus Subcontract
The mechanical cost reimbursable subcontract totaled approximately $5 million. Our audit disclosed that the subcontractor overcharged field labor and certain staff labor wages, payroll taxes, benefits, insurance, and subcontractor owned equipment rentals. The project cost to our Client was reduced by $487,000 as a result of the audit.
