Trauner was retained by the project developer to provide a project audit of the Guaranteed Maximum Price (GMP) contract for the construction of Gallery Place. The Gallery Place is a $130M mixed-use project in Washington, D.C. with 250,000sf of retail space; 230,000sf of Class A office space; and 192 Condominiums, plus parking and amenities.
During this assignment, we provided a preliminary status review of the GMP as it related to the actual costs incurred on the project. Our objective was to arrive at a reasonably accurate measure and evaluation of project costs.
To accomplish this goal, Trauner performed a variety of services. During the initial stages, Trauner reviewed the Contractor’s financial management system and determined whether the Contractor had the financial management tools necessary to identify and segregate contract overruns and underruns. We obtained a detailed description of the contractor’s accounting and job cost system, in conjunction with a detailed job cost report. We analyzed the job cost report to determine whether it provided meaningful segregation of direct and indirect labor, materials, equipment, subcontractor, and indirect field overhead costs. We also performed a detailed review of the GMP contract to define the contract terms and pricing, including all changes or settlements issued. Later, we provided a revenue-side evaluation, which included a review of all backcharge adjustments assessed against others.
Trauner analyzed the history of all time-sensitive or recurring costs, such as monthly field office costs and project management costs. Each of the major cost categories were summarized against the GMP budget by type of cost. Major budget variances were also identified and summarized. Project costs were reviewed for reasonableness based on generally accepted cost accounting standards. General conditions were analyzed and segregated by fixed versus variable costs. We also provided a summary of overhead costs that had increased with extended time on the project. Equipment pricing methods were reviewed to assure reasonable costs were charged to the project.
In addition we reviewed and summarized the following costs:
- Initial contract amount
- Change order additions
- Change order deductions
- Backcharge adjustments
- Progress billing amounts
- Paid-to-date amounts
- Resolved claim amounts
- Unresolved claim amounts
As a result of our efforts, the developer was able to close out the contract for the appropriate amount.