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August 21, 2012

With Construction, the Devil’s in the Details… and the Paperwork

By Partner ESI

MOST OF THE RISK DURING CONSTRUCTION PROJECTS COMES NOT FROM PERFORMANCE ISSUES, BUT FROM PAYMENT ISSUES.

Most of the risk during construction projects comes not from performance issues, but instead from payment issues. As with most of us, general contractors are great at doing their jobs—in their case, construction—but are not necessarily adept at the paperwork or accounting side of the construction equation. Historically, 80-85% of construction defaults are due to errors in payments and/or funds disbursement. Specifically, the money is not getting distributed to the people who are performing most of the duties on a construction project—the subcontractors and suppliers. Many factors can contribute to this problem: poor management, accounting or paperwork errors, commingling of funds between projects (not a sound business practice), and, yes, although admittedly rare, even through the intentional diversion of funds.

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Partner ESI

Partner ESI

Founded in 2007, Partner Engineering and Science Inc., is the leading provider of engineering, environmental, energy, and construction consulting for the commercial real estate (CRE) industry. Touching 1 in 5 CRE transactions in the U.S., Partner is widely recognized as the largest and best provider of third-party physical due diligence reports, including Phase I Environmental Site Assessments, Property Condition Assessments, Seismic Risk Assessments, Zoning Reports, ALTA Land Title Surveys, and Construction Risk Management. Partner’s connectedness to the CRE market gives it an unparalleled view into CRE trends and risk management insights. Partner also provides a full suite of consulting services to support the entire real estate lifecycle, including: Geotechnical Consulting; Building Systems Consulting; Capital Management and Project Implementation Support; Environmental Health & Safety Consulting; Energy, Sustainability & Resilience Consulting; and Site Civil Engineering. With a responsive approach scaled for speed and agility, Partner helps clients manage risk, make smart investments, optimize asset performance, and win at their real estate investment strategies. Based in Torrance, Calif., Partner has over 1,400 employees in 40 offices around the globe.

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