A contractor dispute, reconciled.
The contractor was suing for more. A partner firm reconciled the renovation for the owner and its outside counsel while the dispute was live.
An owner and its general contractor disagreed about the final bills on a large retail renovation, and the contractor had sued for more.
The situation
The owner had a large renovation done. Serious construction defects appeared, including problems with plumbing and sewer lines. The contractor sued to collect additional billings. The owner disagreed and believed it owed much less than the contractor claimed.
What the firm was asked to do
The owner engaged a partner firm to carry out an independent, detailed reconciliation of the whole project, and to say whether the amounts claimed were valid. The scope grew. The firm also advised the owner's management and its outside litigation counsel on the owner's rights under the construction contract to have the defects repaired without the contractor.
The hard parts
- A legal dispute was already under way.
- The bidding model had allowed broad and vague responses.
- Records were missing or incomplete.
- Change orders had gone ahead without approval, and some costs were hidden in other lines.
- Project mismanagement had produced discrepancies and overcharges.
What made it work
The firm reconciled the complete contract, applied the agreed value engineering correctly, and found a further value engineering opportunity. It also set controls for later construction projects, proposed a dispute process for future projects, and suggested a new way to bid.
What the firm recommended
- Apply the agreed value engineering to costs that lacked support, as a route to resolution.
- Widen the definition of approval to cover other forms of communication.
- Work with the client's legal advisers on fixing the defects outside the lawsuit and on changing the construction contracts to lower the chance of repeat problems.
- Review a contract before signing and review costs after it, to catch charges outside the agreed terms.
The result
As the firm reports it, the review recovered money for the owner and supported a resolution of the billing dispute. The firm supplied this account, and Fairview has not verified it.
Note: This is an anonymized example supplied by a partner firm. Details are general, no figures are given, and your own result will depend on your contracts and records.
Related pages
See construction and forensic accounting. The case studies page lists the other examples. Fairview does not give legal advice.
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