Construction

At a moment’s notice, a builder may be forced to delay or cease construction, which can result in economic damages. When situations like these occur, many organizations turn to MDD for assistance. As the world’s premier forensic accounting firm, we have considerable experience quantifying economic damages related to contractor negligence, delays in certification or permit approvals, contract disputes, natural disasters and industrial accidents.

“Delay in Start Up (“DSU”) or Advance Loss of Profit (“ALOP”) insurance cover is an absolute necessity for large and/or complex construction or engineering projects, particularly those financed with structured debt. This insurance was designed to provide cover for the economic losses sustained by a project owner and the financing consortium as a result of insured delays in construction that results in a delay in the commencement of commercial operation. Accidents in construction may lead to slippage in the construction program, pushing back the start date of commercial operations, resulting in financial loss as expected revenues fail to materialise whilst expenses continue.

With most construction projects there are risks of cost overruns, delays, contract disputes and even fraud. These issues can lead to a loss in profits, lost opportunities, hefty fines, a need for increased financing or even additional interest and operating expenses for the project owner. When these situations occur, the parties involved often find themselves at odds not only over liability but also over the quantification of damages. A forensic accountant with experience quantifying construction related damages is an integral part of the investigation team.

As a Developer / Project Owner, it is imperative to stay on top of construction costs. Hard costs related to construction of the building are often the single largest component of a project. As such, the Developer / Project Owner needs to regularly review General Contractor billings throughout the life of a project.