One survey done a few years ago by Kroll’s Global Fraud Report indicated that fraud occurs in 78 percent of construction companies. The construction industry also comes in at second place for the highest incidences of physical assets being stolen — 36 percent.
It’s far easier to prevent fraud in the construction industry than to try to recoup the losses from it. Below are some common ways fraud could affect your construction firm.
Fake injuries and negligence
Sometimes construction workers can get hurt off the clock and then try to claim their injuries were due to a workplace accident because of the insurance coverage and financial benefits. Other times, workers being negligent on the job can cause adverse repercussions that cost a company lots of money.
Your time is money. If workers are padding their hours or clocking in their buddies who are running late, your company is taking the hit. Even when laborers are physically on the job site, if they are fooling around and not working, you aren’t making money — you’re losing it.
Conversely, contractors and construction companies can face fraud charges as well if the timesheets they submit do not align with the clients’ own record of work accomplished. It’s important to make sure that whomever is in charge of timekeeping for your Fort Lauderdale construction company is beyond reproach and meticulous about record keeping.
False billing for materials
Subcontractors can commit fraud by billing for one grade or quality of materials, then substituting a cheaper and less substantial form in the construction. Ultimately, if the client detects the deception and takes legal action, your firm could face legal difficulties.
Be proactive about potential fraud against your company, and vigorously defend any attacks against the integrity of your brand.
Source: True Look, “4 Types of Construction Fraud and How To Prevent Them,” accessed Jan. 05, 2018