As we enter (hopefully) a post-COVID world, construction auditing is not immune from issues facing the wider world at large. More specifically, supply chain issues are significantly impacting the cost of construction materials. Additionally, the Great Resignation has increased the competition for workers. Finally, certain regions of the country have been booming, leading construction firms to be in high demand. These three trends are discussed in more detail below:
Materials’ cost escalations
While subcontracts are often fixed price agreements, the rapid increase in materials’ costs is driving many
subcontractors to seek change orders for this escalation. In many instances, the subcontractors are using
project delays as their justification why a reset is needed. Fort Hill has received several requests to review
materials’ cost escalation claims. A third-party auditor provides an “arms-length” way to give both sides
comfort that the request is justified and rational.
Increasing labor costs
In an effort to recruit and retain employees, construction firms are increasing wages and/or benefits.
While raises are the most common way to increase compensation, many firms are offering better overall
packages. Living and vehicle allowances are being provided for the first time, or increased, to selected
employees. These allowances should be validated at selected intervals over the course of a long project,
as they are easy to withdraw or reduce if the economic environment changes.
Increased leverage for construction firms
Fort Hill is based in the southeastern United States. Some of the larger markets in the region have
had strong economic performance coming out of COVID, and the construction firms are in demand.
As a result, there is upward pressure on General Conditions budgets, fees, insurance rates, etc. Owners
utilizing a construction audit firm to evaluate these items for an upcoming project may find construction
firms less willing to provide appropriate access to these costs, realizing they have the upper hand at the
