Resolution Experts, PC

Construction Cost Control

Construction Financial Oversight

Owners of construction projects rely on ResX's Construction Cost Control services to ensure that the cost of construction complies with the Owner's expectations as defined by its various contracts.

ResX provides the full scope of Construction Cost Control services to construction project owner's ("Owner's"). These services are tailored to the Owner's specific circumstances and can involve both monitoring the control procedures and/or performing the control procedures.

Owners such as hospitals, universities, utilities, developers, and high net worth residential home owners are often not prepared for the volume and complexity of project cost and related billing documents they receive from the Construction Manager ("CM") during the course of a construction project. The inability to properly evaluate and process these documents in a timely manner will disadvantage the Owner and eventually lead to distrust and conflict between the Owner and the CM. This shortfall will be the genesis of future claims and litigation. ResX helps Owners oversee the cost of construction.

Owners engage ResX to provide Construction Cost Control Services either before the Owner signs the contract with its CM or after the contract is signed.

If the contract with the CM has not been established, ResX can advise the Owner with regard to the content of contract clauses that will have a direct impact on the construction project's cost controls. Critical elements of the contract that we focus on include:

  1. Subcontractor bidding procedures.
  2. Definition of the Cost of Work.
  3. Definition of Buy-Out-Savings and accounting for Buy-Out-Savings.
  4. Pay Application ("PA") processing procedures and monthly updates to the Schedule of Values ("SOV").
  5. Change Order ("CO") processing procedures.
  6. Definition of Contingency funds and accounting for Contingency funds.
  7. Definition of Allowance accounts and accounting for Allowance funds.
  8. Definition of Audit Rights and Records Retention.

After the Owner and CM agree upon a contract, ResX's Construction Cost Control services will focus on the CM's compliance with the contract requirements. We will accomplish this by reviewing and testing key documents prepared by the CM, including:

  1. Pay Applications ("PA") and supporting documents, such as:
    1. Schedule updates
    2. Lien waivers
    3. Monthly Reports
  2. Change Orders ("CO").
  3. Budget reports and the status of the Schedule of Values ("SOV").

Owners rely on ResX's Construction Cost Control services because we have superior experience, knowledge, and technology. Our construction industry experience allows us to understand normal construction industry practices and quickly benchmark cost control practices, and related construction documents, to both industry norms and the contract requirements.

ResX will relieve the Owner of the responsibility for singlehandedly shouldering the burden of construction cost control. We provide Owners with the assurance that each PA has been professionally reviewed, tested, tracked, and approved. Specific examples of the control elements we can scrutinize include:

  1. Subcontractor bidding procedures that violate contract requirements
  2. Charges that exceed the amount due.
  3. Charges for costs that are not proven by accounting or field documentation.
  4. Charges that violate important requirements of the contract.
  5. Charges for costs that are specifically excluded by the terms of the contract.
  6. Charges for work (e.g., labor or material) incurred on a project other than the Owner's project.
  7. CO proposals that are over-priced or that duplicate base contract work.
  8. Charges for cost based CO's that are not adequately supported.
  9. PA's with carry-forward errors such as understating the amount paid previously and thereby overstating the amount currently due.
  10. PA's with mathematical errors such as the calculation of fee, or retainage.
  11. PA's that are not properly signed or not accompanied by other required documents such as lien waivers.
  12. Insurance charges that are not supported by actual insurance or violation of contractual insurance requirements.

Throughout the project, ResX will maintain the files and ledgers needed to memorialize the CM's PA submittals, the results of our tests, and the payments subsequently issued by the Owner. At the conclusion of the construction project, ResX will conduct a close-out audit of the CM's PA's and recommend to the Owner the final payment amount.