Construction fraud refers to any deceptive or dishonest activities that occur within the construction industry with the intention of gaining an unfair advantage, financial gain, or causing financial loss to others. It can involve various parties including contractors, subcontractors, suppliers, employees, or even project owners. Construction fraud can take many forms, including:

• Billing Schemes: This involves invoicing for fictitious goods or services, inflating costs, or submitting invoices for work that was never performed. It can also involve double billing, where the same work is invoiced to multiple projects.  A third way to do this is to applying math or rates incorrectly and making it look legitimate.
• Bid Rigging: Bid rigging occurs when contractors collude to manipulate the bidding process to ensure that a particular contractor wins the contract. This can involve submitting artificially high bids to make other bids seem more competitive or sharing confidential information among competitors.  Other procurement frauds exist that follow up on bid rigging.  Knowing how bid rigging works is important to understanding construction fraud. 
• Change Order Fraud: Contractors may use change orders as a means to inflate costs or obtain additional payments for work that was not originally agreed upon. This can involve submitting fraudulent change orders, exaggerating the scope of work, fictitious site conditions, gold plating or inflating costs.
• Substitution of Materials: Contractors may substitute lower-quality materials for those specified in the contract in order to reduce costs and increase profits. This can compromise the quality and safety of the construction project.  This is essential when understanding that fixed fee contracts need to be audited, as what we often seen is that intangibles are often not taken as per contract requirements, all in hopes that no one will notice.  The other thing that may happen is that contractors purchase items for fixed fee contracts but apply it to other projects with the same owner – usually with a cost plus agreement in place.
• Kickbacks and Bribery: Kickbacks involve providing or receiving payments, gifts, or other benefits in exchange for favorable treatment or business opportunities. Bribery involves offering or accepting bribes to influence decision-making or gain an unfair advantage.  In construction, we see this often when site visits are done or when executives head to exotic locations to look at marble or granite.
• False Claims: This involves making false statements or representations in order to obtain payment or approval for work that was not performed, materials that were not supplied, or costs that were not incurred.
• Employee Theft: Employees may steal materials, tools, or equipment from construction sites for personal use or resale. They may also engage in time theft by falsifying timesheets or claiming overtime for hours not worked.
• Bid Shopping: Bid shopping occurs when a contractor discloses a subcontractor's bid to other subcontractors in order to obtain lower bids, often without the original subcontractor's consent.
• Fraudulent Lien Filing: Contractors or subcontractors may file fraudulent mechanics' liens against a property in order to force payment or exert leverage in a dispute. 

These are just some of the areas where an auditor can find fraud in construction projects.

Areas Covered     

• Latest Construction Trends
• Layering and Labor Fraud
• A look at cases that were prosecuted
• Controls to prevent these cases from happening again
  

Course Level- Intermediate

Who Should Attend  

Construction Auditors, Internal Audit, Executive Sponsors, Project Managers, Accounts

Why Should You Attend

Attendees should learn about current construction fraud courses for several important reasons:

• Stay Updated on Evolving Tactics: Construction fraud techniques are constantly evolving as perpetrators find new ways to exploit vulnerabilities in systems and processes. By attending this current course, attendees can stay informed about the latest tactics used by fraudsters, enabling them to recognize and mitigate emerging threats effectively.
• Enhance Fraud Detection Skills: Learning about construction fraud courses equips attendees with the knowledge and skills needed to detect fraud more effectively. This course will cover various red flags and indicators of potential fraud, empowering attendees to identify suspicious activities early and take appropriate action to prevent financial losses.
• Protect Project Finances and Resources: Construction fraud can result in significant financial losses for project owners, contractors, and other stakeholders. By understanding the methods used to commit fraud and implementing proactive measures learned in courses, attendees can protect project finances and resources from exploitation, ensuring that budgets are used efficiently and transparently.
• Maintain Legal and Ethical Standards: Participation in construction fraud courses reinforces the importance of adhering to legal and ethical standards in the construction industry. Attendees learn about relevant laws, regulations, and ethical guidelines governing construction practices, helping them conduct business with integrity and accountability.
• Mitigate Reputation Risks: Instances of construction fraud can tarnish the reputation of individuals, organizations, and projects involved. By educating themselves through fraud courses, attendees can mitigate reputation risks by demonstrating a commitment to ethical conduct and fraud prevention, thereby preserving trust and credibility within the industry.
• Foster a Culture of Fraud Awareness: Attending this construction fraud course fosters a culture of fraud awareness within organizations and project teams. When stakeholders are educated about the risks and consequences of fraud, they become more vigilant and proactive in detecting and preventing fraudulent activities, creating a more resilient and trustworthy construction environment.
• Comply with Industry Standards and Requirements: Many industry certifications and professional standards require ongoing education and training in fraud prevention and detection. By attending current construction fraud courses, attendees can fulfill these requirements and maintain their professional credentials, demonstrating their competence and commitment to best practices in fraud mitigation.
  

In summary, learning about current  construction fraud courses is essential for staying updated on evolving fraud  tactics, enhancing fraud detection skills, protecting project finances and  resources, maintaining legal and ethical standards, mitigating reputation  risks, fostering a culture of fraud awareness, and complying with industry  standards and requirements. This course will empower attendees to effectively  combat fraud and uphold integrity within the construction industry.

Topic Background    

Construction fraud can have serious consequences, including financial losses, project delays, legal disputes, damage to reputation, and compromised safety and quality standards. Preventing and detecting construction fraud requires effective internal controls, monitoring, oversight, and enforcement mechanisms throughout the project lifecycle.   Knowing about the cases making the headlines is important to mitigate the chance of reoccurrence.