Determining if a construction audit makes sense for your Tribal entity

Construction projects are exciting opportunities for growth and prosperity, but they can also present significant challenges — particularly around managing budgeted costs and cost overruns. A construction audit, which can be implemented at any stage of the capital-improvement process, can help identify, mitigate, and resolve these challenges.

To answer some key questions about what types of projects are the best fit for a construction audit, I spoke with Stephen Bacchetti, who specializes in construction audits.

What size of construction project is a good candidate for an audit?

Typically, the projects we work with are valued at $15 million or greater.

When does it make sense to have a construction audit performed?

During the planning phase, construction auditors can identify and resolve problems that could cause future delays and cost overruns.

Once construction starts, there are opportunities for internal controls to be evaluated and improved. Perhaps most critically, contractor payment applications and change-order submissions can be reviewed in detail to identify potential overcharges and to validate contractor compliance.

How does a construction audit provide value beyond what a project-management firm can offer?

Many Tribal entities hire third-party, project-management firms to act as an owner’s representative. These firms focus on the big picture and completing a successful project. They also often make decisions on behalf of or in conjunction with Tribal officials.

While a project-management firm adds a layer of expertise that a Tribe may not have internally, it isn’t a substitute for a construction audit. An external construction auditor can provide an independent assessment of a construction project’s risks. Because an auditor also understands the construction industry, he or she can provide insight into the reasonableness of costs and the internal and contract controls that have been implemented.

What does a construction audit focus on?

A construction audit focuses on three key items:

• Assessing performance
• Determining the extent to which established goals and objectives are being achieved
• Identifying improvement opportunities available to better align construction practices with project goals