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What You Need to Know About Construction Fraud

What You Need to Know About Construction Fraud

by Proforma Construction, January 10, 2019

Here’s how you can identify and prevent construction fraud.

Construction fraud is a major issue that affects many general contractors in the Bay Area.  In fact, surveys have shown that three out of four construction companies report instances of fraud on an annual basis.  But what exactly constitutes construction fraud and what can you do to prevent it from affecting your bottom line?  Here are three common types of construction fraud and what you can do to prevent these issues.

1)  Time Theft

In the construction industry, time is money.  While it might not seem like a major issue, having your employees arrive late or leave early can seriously impact your productivity.  When workers tamper with their timesheets or ask their co-workers to punch them in and out at the appropriate times, this constitutes fraud.  One way to prevent this from happening at your business is by installing cameras to monitor when your employees are actually coming and going.  This footage can serve as evidence in the event of a dispute over time worked.

2) Fake Injuries

Most states require businesses to provide workers compensation insurance benefits for their workers.  Unfortunately, some dishonest employees take advantage of this protection by faking injuries in order to receive an insurance payout.  Generally, the best way to prevent fake workers comp claims is by installing surveillance cameras throughout your work site.  This will make it much more difficult for your employees to fake an on-the-job injury.

3) Inflated Billing

If you are working with subcontractors, you also need to be wary of fraudulent billing.  Oftentimes, dishonest subcontractors will overstate their units of production, units of labor, and even lie about the equipment used to complete a job in order to receive more pay.  The best way to prevent these fake costs is by working with established subcontractors who you can trust.  Before hiring a new subcontractor, always verify that they have the right proof of insurance, conduct a background check, and ensure that they sign a legal contract that lays out their work expectations and obligations.

This is how you can prevent these common instances of fraud that affect general contractors in the Bay Area.  Are you looking for the right firm to safely and efficiently complete your commercial construction project in the Bay Area?  If so, then contact the experts at Proforma Construction.  Serving Pleasanton and the surrounding California area, our highly-trained team is ready to make your commercial construction dreams a reality.