The owner of a large hotel and commercial property portfolio faced construction delays, cost overruns, and labor disputes on construction projects that had the potential to greatly reduce overall property values. The Portfolio Fund Manager in charge of these properties recognized the need to gain control of current projects and install processes and controls to mitigate the chance for issues to arise in the future.
The Portfolio Manager wanted to conduct a full construction audit to locate and eliminate project cost overruns, determine control weaknesses, and develop and implement processes and controls for current and future projects. As a result of the construction audit, we discovered overpayment of labor and materials, performance of work with no contract in place, incomplete project budgets, timelines, and schedules, and little to no financial and project documentation. Additionally, partnership agreements, loan covenants, licensing, and compliance violations were found with the potential to stop all construction.
The client recovered excess payment of material and labor cost and new labor contracts were negotiated and created. Meeting with lenders, city officials, and investment partners, we renegotiated loan, partnership, and licensing agreements to match the newly created budget and project schedules. We implemented a process to guarantee that change orders and construction draws would receive the proper review and approvals. Additionally, controls and processes were implemented which outlined the requisition, bid, and contract award process ensuring that all new contracts were negotiated based on a level data set.
Finally, a process and document repository was built to ensure all documentation (warranty, permits, certificate of occupancy, lien releases, regulatory compliance, and licenses) is complete and secure.