The following is an outline of basic Construction Cost Audit Fundamentals when reviewing a construction cost estimate.
Construction cost audit procedures involve a thorough understand of the scope of work and all phases leading up to and ending with the construction cost estimate. This includes pre-construction and planning phase activities… initial owner scope of work as well as all related planning, procurement, and project management processes.
A construction cost audit and associated checklist are important risk management . Equally important are LEAN construction planning, procurement, and project delivery tools. These serve to aid in overall continuous improvement of repair, renovation, maintenance, sustainability, and new construction project outcomes.
Auditors should engage experienced construction professionals capable of applying industry best management financial practices. Any audits should be conducted, however, by an independent third party. Regular audits are mandatory for any LEAN construction planning, procurement, and delivery implementation.
Audit procedures are linked to the construction delivery method used and associated scope of work and time frames. Billings are linked to plans, schedules, and any unanticipated delays/issues.
The process including identifying and analyzing direct costs and variances at a granular level and associated validation using source documents and independent locally researched construction cost information. These include soft costs – general conditions, insurance/bonding, fees/permits, as well as direct costs for material, equipment, and labor in elemental CSI MasterFormat data architecture. Source documents include, but are not limited to contracts, original and current schedule of values, detailed construction cost estimates, pay applications, relevant roles, responsibilities of participants and associated time sheets/payroll documents, job site sign-in records…
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