Recent accounting scandals have raised suspicion over corporate financial information. The doubt cast has set a stage of even greater wariness over the calculation of damages within a construction claim. The damage calculations are the culmination of the entitlement, schedule analysis, and impact analysis presented in a claim. Most often the damages are a combination of direct costs derived from job cost data, as well as home office overhead costs applied according to the claim theory adapted.
Currently, an alarming trend exists in the construction industry with regard to construction claims submitted to owners. Owners are taking the offensive. It is becoming common for an owner to declare claims fraudulent upon review. The declaration of fraud is based on the damage calculations themselves. Any questionable damage calculations that cannot be substantiated, or are in conflict with real data, are treated as false, thereby bringing cause for the entire claim to be charged as fraudulent.
From a contractor’s point-of-view, this certainly seems to be a stretch of logic because contractors think in terms of estimates; estimating is part of business. The courts, however, have taken an entirely different point-of-view. Since the legal system is based on fact, and being able to prove it, the courts have expected that all damage calculations be based on factual data. This has placed a fiduciary responsibility on the contractor to only assert financial damages that are borne in hard data and airtight logic.
The courts have made a statement; they want an accurate damage analysis, they want it substantiated and they want an expert to authenticate it. The best kind of expert to authenticate damage calculations is one that understands construction cost accounting and the intricacies of accumulating accurate cost data. To assess the accuracy of job costs and the overhead used to formulate damage calculations, hands-on construction accounting experience is desirable. Construction Controllers or CFO’s fit the bill. This level of construction experience brings with it an understanding of construction work, the terminology and even a close appreciation for the labor, materials, and other expenses that might make up a damage claim.
Druml Group provides such experts: our skilled professionals have previously served as Controllers or CFOs in respected construction organizations. That is why Druml Group is the best source for Forensic Accounting. The ideal time for our services is prior to submission of a claim in order to ensure the accuracy of the financial information, to spot loopholes and weaknesses in logic, and to mitigate the potential for a fraudulent claim action by the owner. Our services are also valuable in a courtroom setting when an expert is needed to state an opinion with regard to the accuracy of the financial information presented in a claim.
Top-notch construction financial forensic expertise can only come from those with extensive hands-on construction financial experience; that is why Druml Group is your logical choice. Call us today to discuss your current needs.