A major Tier One research university planning to expand its biomedical engineering program, was set to build a $12.6 million, 26,250 square foot engineering building. Equipped with glass-walled, open concept labs and classrooms, this competitively bid project was a cost plus overhead and profit contract. The client needed assurance that the contracted billing rates for labor, vehicles and tools represented their costs without embedded profit or overhead costs.
Because the construction contract had not yet been signed, a pre-construction audit was necessary. This type of audit is applied to the financial terms of a construction contract, potentially exposing an owner to unnecessary financial risk, hidden profit and ambiguous and/or contradictory contract terms and conditions. A pre-construction audit brings transparency to the project’s pricing terms, therefore empowering the university to effectively negotiate final contract terms, conditions and price.
Baker Tilly’s pre-construction audit found that several billing terms included non-allowable components that would have increased the project cost if not discovered.
The university’s total contract adjustment was $70,542, a 14:1 Baker Tilly fee return on investment.
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