Project owners often believe that once a construction project is completed, their problems are over. Unfortunately, this is not always the case. Construction defects that result in multimillion dollar losses can manifest several years after completion. And in the case of large institutional projects like schools and hospitals, deficiencies can cause unacceptable increased costs of maintenance. 

The only way to ensure work is up to contractual and building code standards is to carry out periodic post-construction audits. Timely post-construction audits can detect a variety of issues, preventing further damage and enabling owners to seek costs of repair from responsible parties. 

Here are the five most common issues discovered during post-construction audits. 

1. Construction Overcharges

Even if a project was completed on budget, it may include inappropriate costs or costs that were not agreed to by the project owner. Some contractors inflate budgets from the outset. Others eliminate required work to avoid going over budget or use cheap, low-quality materials to reduce costs on their end. 

Overcharges can result from deliberate misconduct, mathematical errors, lack of communication, or excessive change orders. 

During a post-construction audit, the contactor’s billing is carefully reviewed to determine if it includes non-allowable costs, such as overhead, inappropriate overtime charges, or unwarranted/overpriced change orders, among other potentially problematic items. 

Common Risks: 

• Superfluous change orders that add no value to the project 
• Sales tax included in billings despite tax exemptions 
• Overpriced change orders 
• Overbilling for relocation, transportation, communications 
• Inflated hours/labor rates 
• Incorrect labor burden percentage 
• Inappropriate cost-shifting 
• Excessive number of supervisors on site 
• Excessive fees 
• Excessive equipment rental fees 
• Duplicative change orders 
• Discounts are not passed to the owner 
• Contractor fees charged on self-performed work 
• Blanket purchases resulting in billings for materials used in other projects 

Red Flags: 

• Vague material requirements in contract and plans 
• Specifications subject to change based on pending studies 
• Redundancy: scope overlap between billing items 
• No billable hours cap specified for exempt employees 
• Low bid/vague contract specs 
• Lack of staff budget estimates 
• Lack of credits for returned materials 
• Excessive profit margins 
• Excessive material orders 
• Change orders surpass 10 percent of the initial budget 
• Adjustments for holiday hours not included 

2. Non-Conforming Work

Nonconforming work is work that deviates from specifications and contract documents and fails to meet contractual and industry standards. When we detect nonconforming work during a post-construction audit, we offer details about the problem and its causes, also determining how it can be solved and what corrective changes are needed. 

If the building/structure is functional, in spite of deviating from specifications, the owner can accept the work and request credit for the nonconforming items. However, in some cases, deviations can have a disastrous effect on functionality or property value, and owners can recover costs of repair. If they are successful, contractors or their insurer must then cover the cost of any necessary repairs. 

Common Instances of Non-Conforming Work: 

• Work that does not meet project specs, tolerances, etc. 
• Work performed using methods that have not been approved 
• Work included in approved plans was not built 
• Test results reveal failure to adhere to contractual standards 
• Material substitutions that the owner has not approved have not been approved by the owner 
• Inaccurate design, at odds with the conditions of the terrain 
• Failure to conduct required tests and inspections 

3. Punch List Failures

When you do a walk-through after construction has been completed and discover problems that need fixing, your contractor must establish a timeline for needed repairs. If they eventually fail to make the repairs on time, this constitutes a punch list failure. 

A post-construction audit can also determine that your contractor failed to deliver work included in the punch list. 

Basic Punch List Items: 

• Appliances are functional 
• Appropriate paint color 
• Appropriate paint quality 
• Cabinet doors, drawers, windows, and doors open and close smoothly 
• Debris has been cleared from the site 
• Floors have not been damaged by construction work 
• HVAC is fully functional and appropriately zoned 
• Light systems are functional 
• Locks work as expected 
• Locks, hinges, latches work smoothly 
• Plumbing is fully functional 
• Surfaces are clean 
• There are no leaks 

Poor quality controls during construction often lead to lengthy punch lists. An efficient post-construction audit can clearly determine the extent of the failures and ensure no detail is overlooked. 

4. Built Environment Defects

Built environment defects include some of the most common problems found during post-construction audits. Ranging from building envelope issues to HVAC imbalances and roof-to-wall connections, these defects can be difficult to detect, sometimes manifesting symptoms only months or years after completion. 

Roofing Design 

Roofing design issues often require costly repairs. Roofs need to be secure and waterproof. When they are not well designed, water ingress can cause multiple problems, including extensive damage to the building envelope. 

Ventilation Systems 

Insufficient ventilation can lead to a diminished life span of the system. 

Masonry Defects 

Common masonry defects include cracking, bowing walls, excessive moisture penetration, leaning or slipping structures, and weathered finishes. Poorly executed masonry makes buildings highly vulnerable to rainwater and temperature shifts. 

Heating and Cooling Imbalances 

HVAC systems provide comfort and create a safe environment. Defective installation can damage building structures while also leading to unnecessary power costs. If a post-construction audit finds a contractor is at fault, building owners may be able to recover increased costs of electricity for any expenses resulting from the defect. 

Common signs of a failing HVAC system: 

• Unusually high power bills 
• Stagnant air and odors from restrooms/kitchen areas 
• Random room temperature variations 
• Inadequate temperature control 

Plumbing System Issues 

Construction defects involving plumbing systems are often hard to pin down and can cause significant damage if unresolved. Leaks can damage building structures. 

As experienced post-construction consultants, at times we rely on water leakage tests, using infrared imaging and other advanced technologies, to detect leaks. We can then locate damaged building components and determine who is liable. 

5. Architectural Errors

If an architect’s mistake has caused delays or building defects, they are responsible for fixing these problems at their own expense. Efficient post-construction audits can detect architectural errors and determine whether architects or design professionals are at fault. 

Common Types of Architectural Errors: 

• Failure to adhere to building codes 
• Inadequate insulation 
• Inadequate roof slopes 
• Insufficiently lit rooms 
• Lack of detail in drawings and plans 
• Miscalculation of building dimensions or boundaries 
• Poor planning of space 

Post-Construction Audits Lead to Recovery of Costs of Repair 

Recoverable costs of repairs for defects detected during a post-construction audit may include:  

• Cost of past/future repairs 
• Excessive heating and cooling costs 
• Loss in property value 
• Loss in property use 
• Temporary location costs 
• Court costs  
• Attorneys’ fees 
• Sometimes punitive damages 

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By Marc Gravely