A client sought monitoring oversight for an owner in a public project where a dispute occurred when the contractor who submitted its bid was selected as the winning bidder. The contractor incurred significant labor overruns and sought to have the owner be responsible for the cost overruns. However, the contractor failed to consider cause of the excess labor or the impact to determine whether other cause, existed for the excess costs.
Baker Tilly’s analysis focused on the accuracy of the bid and the underlying source documents as well the bid tabulations. During the investigation, Baker Tilly documented a bid methodology that relied heavily on the use of apprentice labor. The contractor’s actual labor mix, and how that reconciled to its bid or underlying assumptions, was found to be problematic. In addition, the investigation revealed that the contractor provided significant discounts on the overall project without any detailed explanation or documentation. The contractor also appeared to have excluded its profit and bond costs on the project. The overall risk to the owner was the contactor attempted to hold the owner responsible for the excess costs on the project.
The client saved millions of dollars that the contractor was unable to prove was compensable under the terms of the contract.
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.