International university implements new change order control procedures after overrunning project budget

Our client’s need

A university with campuses throughout the world built a $22 million, 53,000 square foot STEM laboratory and classroom, which overran the planned project budget. Change orders had been poorly documented and cost per square foot had escalated. The university needed to uncover if the increased cost was due to their own design changes, contractor performance, or poor construction management controls.

Baker Tilly solution

The university had never previously completed a construction contract audit or reviewed their construction project controls. Due to Baker Tilly’s experience with STEM projects and construction project controls, Baker Tilly was brought in to design and execute an audit program. The objectives of this closeout audit were to determine the source of the change orders, if they were priced using the contract terms and if circumstances around the change order management process should be changed.

Results achieved

After the audit and controls review, Baker Tilly came to the following findings:

• The contractor had failed to credit the construction management fee and general conditions on deductive change orders of nearly $1 million. The university was credited for $93,000 of construction management and general conditions overcharges.
• Approximately $300,000 of change orders were approved without supporting price documentation.
• More than $2 million of changes were approved without the university performing scope and price verifications. In result, the facility development team implemented changes to the university’s change order control environment.
• The completed project audit and review resulted in a 3:1 fee return on investment.

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.