One of my theories about why A/E firms do so poorly with at-risk construction projects is we are just not equipped for the people we deal with in that “other” world. There are some bad people out there who are perfectly OK with stealing from you if they can get away with it. We see few of those over on this side of the fence. So how do they often catch us off-guard?
Here are things to look out for:
- Crooks in the finance and accounting department. There are numerous ways these people can steal from you. Two of the most common ways they do this is by adding people to the payroll you don’t know you have and issuing them a check every week along with everyone else. That’s why you should always match up the number of people getting paid with your employee roster. The other thing these people will do is set up fake vendors. The “vendors” submit bills for goods or services (that weren’t provided), and then those bills get paid! There are many other scams. One I saw involved the CEO and CFO colluding to steal from the company. They each had a credit card they used for everything and then wrote off all of it as travel expenses. They got more than a half million dollars doing this. The sad thing is each was already highly paid.
- Crooks in the employee ranks. There are lots of ways employees steal from you. The biggest area of theft involves hours of work paid for work that was never done. Falsifying time sheets is rampant. Some firms have paid overtime for exempt workers and no one checks to see if “Bob” put in those extra 10 hours he is claiming he did. This is very common. Other ways employees steal from you includes expense reports. Some people outright falsify them. One scam I heard about was done by a guy who was at a high level in his company. The firm – a large company – had offices and projects around the globe. He would buy airline tickets, charge them to his personal card, and then submit them on his expense report. Later he would cancel his flight and get a credit. No one knew where he was going or when. It was easier to pull this one off than you’d think.
- Crooks as sub-consultants. There are plenty of ways sub-consultants can steal from you. The number one way is they make an end run around you to the client and do future work for the client directly, instead of through you. But other ways they can overcharge you include billing for time beyond what their contract allows, and no one catches it. The bill just gets entered and paid. Or billing you for work performed on the other guy’s project. I have personally had both geo-techs and surveyors bill me for work that was performed on someone else’s project! Their billing departments were either confused or they were run by crooks.
The point of all this is be wary! There are probably more dishonest people out there than you realize. We work in a nice industry and it’s easy to be caught off guard.
Mark Zweig is Zweig Group’s chairman and founder. Contact him at email@example.com.Subscribe to the electronic version of The Zweig Letter for free.