construction fraud
Tom Hallissey No Comments

Construction fraud is an issue that plagues contractors across the country. In fact, three out of four construction companies surveyed by Kroll Global Fraud Report in 2015 reported that they had experienced fraud within the last year.

Whether you realize it or not, fraud has probably impacted your bottom line. From time theft to fake injuries, these workplace issues can be prevented if you learn how to recognize them.

3 Common Types of Construction Fraud

construction fraud

Construction companies are vulnerable to fraud, because they often have several different job sites, multiple suppliers and more than one subcontractor. Any contractor can limit their exposure by taking these three steps.

1)      Time Theft

construction fraud

In the construction industry, time is money. If workers take the liberty to arrive late or leave early, your company’s productivity will suffer. This can happen when workers alter timesheets or clock co-workers in.

What you can do

If you are concerned about time theft, you could install cameras with security recording. You would then have a visual record of employees coming and going from the job site. This irrefutable evidence could be used to settle disputes over time worked.

2)      Fake Injuries

In New York, contractors are required to have workers’ compensation insurance. This coverage provides financial protection when an employee is injured on the job. But, it can’t protect you from dishonest laborers. If an employee falsely submits a claim for an injury sustained off-site, it can raise your overall insurance costs.

construction fraud

What you can do

Security cameras are also the answer to this common issue. If an employee claims a suspicious injury, you could review the footage to see if they were actually injured on the job.

3)      Billing for Unperformed Work

The work of subcontractors is another area you must keep on top of to prevent construction fraud. A dishonest subcontractor could overstate the units of production, the units of labor or even the equipment used. These fake claims can easily drive up the cost of your projects.

construction fraud

What you can do

  • Use discretion when hiring subcontractors
  • Choose local and established companies
  • Ask to see licenses and proof of insurance
  • Insist on a signed contract

Since construction fraud can occur at any point of a project, it pays for contractors to remain aware of these common types of abuses at all times.

construction fraud