Refinance Risk Analysis
Background: Bank QS - Representative
Our services were engaged by a finance broker acting on behalf of the bank for their client. The project was already underway when we were asked to do an audit and risk review of the project after the client had requested more funds to finish the renovation on an upmarket, high spec Auckland dwelling.
At the time the client had exceed the original budget, however only 60% of the work was complete.
Work Completed & Outcome:
Analysed the claims submitted by the main contractor and discovered there was no formal contract in place ( Illegal ) and that the main contractor was using his merchant trading account for subcontractors including structural steel, aluminium joinery, roofing & insulation.
Essentially the subcontractors were invoicing the merchant - the merchant was invoicing the main contractor and the main contractor was invoicing the client - this process added an additional layer of margin where one does not normally exist, and cost the client an additional $ 150,000.00 on there construction costs.
A report was produced for the purpose of financing and recommendations were made. The client was advised of the issues we identified.
Residential Client Over Budget
Background: Bank QS
Project $1+ million over budget on 4 storey Auckland home, clients lawyer recommended a QS to review scope and project.Outcome:
We discovered that the main contractor had altered the payment terms through the contract and started charging the client on “charge up” rather than on the fixed price as agreed in the contract. For the client the result was his house was 50% complete when he expended the amount that he had originally drawn down in his construction loan.
Full review and audit of the contract, work to date, payments and quality of workmanship was complete. With assistance of the client’s lawyer a new program was agreed with the main contractor with clearly defined milestones, progress payments and other deliverables.