A construction cost audit entails a comprehensive assessment and evaluation of the documents associated with the construction contract and the expenses charged to the owner. This audit will make possible the identification of excess charges and inaccurate billings incurred in the course of the construction project. The billing errors encompass the following: duplicate invoices, miscalculations, and unauthorized disbursements or expenses.
Conducting a construction cost audit requires more than just basic accounting skills. Thus, the construction cost auditor must have a thorough understanding of the construction process, construction contracts, and construction costs. By employing an experienced construction cost auditor, high exposure cost areas of the construction project, that are most likely to lead to billing errors and overcharges to an owner, will be quickly and promptly identified. Typically, billing errors and overpayments range from 1% to 5% of the contract amount. Moreover, a construction cost audit performed by an experienced construction cost auditor is different and gives a more thorough type of accounting. Employing a quality construction cost auditor will result to huge benefits on any type of construction project and will usually result to savings in the range of 1% to 5% of the contract amount.
Supports the Construction Project
The role of an experienced construction cost auditor is to support the construction project by conducting a financial assessment and taking it to the next level. It should be noted that the construction cost auditor will not displace the architect, accountant, or project manager by assuming their roles.
Reviews Change Orders
Change orders are usually one of the key exposure areas in terms of overcharges to a construction project. An experienced construction cost auditor will review change orders in order to ensure that they were rightfully and appropriately charged. This review will also make sure that any back-charges were billed to the accountable general contractor or subcontractor.
It happens quite often that corrective re-work will be erroneously billed to a project as change order works. These charges are crucial and may result to the owner paying twice for work that has already been carried out. The experienced construction cost auditor will make certain that the cost of hourly rates, unit prices, profit markups, and other expenses are charged according to the terms outlined in the contract.
Has Deep Know-How
Probably the best time to bring in a construction auditor is during the pre-construction phase. With that, he/she will be able to carefully review the contract and provide an essential basis for the construction audit.
An experienced construction cost auditor normally has a good understanding of construction contracts and the bidding process. The employment of a construction cost auditor, even after the project has commenced, will have a massive effect particularly to the owner due to the fact that the auditor will be directly involved,.
Makes a Difference
An experienced construction cost auditor can make a big difference to the owner’s construction project, regardless of its size or complexity. Adding a quality construction cost auditor to the project management team will let the owner have an expert, who will manage the financial aspects of the construction project, from the start until the completion of the project.
Looks Out for the Owner’s Best Interests
With an experienced construction cost auditor, the owner will have someone who will look out for his/her best interest when resolving any issues that may arise as a consequence of dealing with the general contractor, construction manager, or subcontractors. The auditor will be able to assure all parties involved in the construction project that the costs are well-handled and all billings are accurate. More so, an experienced construction cost auditor will reduce the likelihood of litigation, as well as speed up the close-out period upon the completion of the job.
The importance of hiring an experienced construction cost auditor outweighs the expense attributed. With their experience they will enable your healthy project to thrive.