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3 Current Trends in Construction Auditing

Updated: Feb 3, 2023

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 more in detail below:


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 more in detail below:


Materials' Cost Escalations


While subcontracts are often fixed price agreements, the rapid increase in materials' cost 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 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.


Increasing 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 moment in contractual negotiations.

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