Audits

These are required as they are an essential step in the process of establishing the type of contractual claim. They also provide the evidence required to establish that there is in fact a claim to be pursued and also in many instances the basis of the valuation to be adopted for those claims, rather than simply waiting until the end of the project an presenting it as “total cost claim” – Actual Cost of the job less Contract Price (inclusive of Variations) paid. That’s the accounting approach not the valuation approach. See more on this at “Contractual Loss & Expense Claims or Schedules” 

The valuation approach is to submit loss and expense schedules (and claims) based on costs to be incurred provided there is sufficient certainty of those costs, and evidence that they have resulted from an action taken by the Principle/Client/Superintendent/Architect/Engineer etc. The advantage of loss and expense claims over a “total cost claim” is that they can be submitted in advance of incurring the costs and therefore avoid suffering “cash-flow drain” if the alternative approach is taken. Opportunity Audits are commonly found to be used in by Contractors on projects at the first initial signs of “cash-flow drain” and are means to avoid the problem before it becomes a problem.

Opportunity Audits starts with a Cost Value Reconciliation and involves drilling down into areas shown to have budget blowouts. These are notified under a letter similar to one provided on our website and become Forensic Audits when the difference in costs from the budget can’t be reconciled.