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  Construction Material Savings  

 Here are examples from industry publications, CRW archives, and AMG archives

 

Recoveries   Savings

Defined as immediate monetary resolutions of audit issues by means of a cash refund, discount, credit memo, offset against a concurrent calim from the other party, or receipt of materials or services as compensation.

Appear in Green in the examples table

 

Defined as immediate monetary resolutuions of issues plus quantifiable, monetary savings arising from satisfactory resolution of the issue. Long term savings are generally reduced to net present value.

Appear in Blue in the examples table

     
Potential Savings   Losses

Issues for which savings likely occurred, or will occur, for which the ultimate resolution is undetermined or unsettled.

Appear in Black in the examples table

 

Issues for which avoidable losses were incurred.

Appear in Red in the examples table

     
CONSTRUCTION MATERIALS SAVINGS

Issue

Finding

Result

The project encountered unsuitable soils and decided to use fly ash to stabilize the soil. A local source was chosen and hundreds of tons of material were delivered to the site.

The auditing consultant found a construction industry publication that included an article on the hazards of using calcified fly ash produced in certain power boilers. The client was notified and payment for the materials was halted.

 

Upon being requested to provide credit for the undesirable material, the vendor credited the entire outstanding balance.

 

$75,000 Recovery

 

 

Source: Cost Recovery Works Archives, 1999

The site grading subcontractor was awarded a separate subcontract for roads and paving.

The consulting auditor reviewed the respective scopes of the subcontracts and found that the supply of graded aggregate, base course was duplicated.

The subcontractor agreed to a corrective subcontract price adjustment and progress payments were adjusted.

 

$187,600 Recovery

 

Source: Cost Recovery Works Archives, 1999

The project management firm had negotiated a blanket purchase order for wire and cable with reduced pricing based upon the purchased volumes from multiple sites.

Review by the auditing consultant indicated that the pricing of releases under the blanket order exceeded the terms of the agreement.

The issue was turned over to Purchasing Management for resolution.

 

$150,000 to $240,000 at issue

 

 

Source: Cost Recovery Works Archives, 1999

Modern process control valves are frequently purchased under blanket purchase orders with supply houses. Pricing is comprised of multiple components which depend on valve specifications, with discounts applied to each component. Accurate pricing may be difficult to achieve.

Recognizing that purchasing personnel lacked the time to audit the pricing of the valves, the project auditor conducted a review.

The project auditor selected a sample of valve purchases from the 5 designated project suppliers. The pricing was tested for accuracy. The findings were that 2 of the suppliers had overcharged due to the omission of one or more discount factors.

 

The suppliers refunded more than $33,000. Savings to the project and to manufacturing operations from correction of the suppliers' billing systems exceeded $200,000.

 

$33,000 Recovery

$200,000+ Savings

 

 

Source: AMG Archives

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