How to Avoid a Construction Fraud Claim

construction fraud

The construction industry faces many risks and one of them is construction fraud.

You might be doing things not even aware if can cause someone to accuse you and file a suit against you under fraud claims.

In order to never make this mistake, you should take a look at this guide.

1. Avoid Falsifying Payment Applications

In construction fraud cases, falsified payment applications make up over half the frauds.

False payment applications happen when someone produces a false invoice, alters the line by line price for a service, or inflates the rates.

Sometimes these frauds are committed when someone tries to cover up an added personal expense or other.

2. Don’t Bill for Unperformed Work

Billing for unperformed work can surely get you sued for fraud. If you’re a government contractor, for example, you’ll be violating the federal False Claims Act.

If you ever attempt to bill for unperformed work, you put yourself at risk for getting sued due to construction fraud.

3. Avoid Altering Change Orders

In order to avoid issues with change orders, contractors and subcontractors need to work together to monitor issues closely.

Both of these parties need to check for issues with excess charges, descriptions, missing items, and other specifications.

Having unresolved discrepancies might lead to a fraud claim if both parties don’t question the mistake in time.

4. Be Transparent About Subcontractors

As a contractor, if you hire a subcontractor, you need to be transparent and don’t surprise the client with excess costs.

Start by giving the subcontractors the full scope of the work they will perform so there are no surprises.

5. Always Use Specified Material

If you want to avoid getting sued for fraud, make sure you use the specified materials.

Substituting the plan-specified materials with a lesser or used material could result in a fraud lawsuit.

6. Don’t Remove Equipment and Tools

Removing tools or equipment form the worksite might put you at risk for construction fraud.

Be sure to secure equipment using locks, fences, and other means to prevent theft. Some tools should be removed overnight to protect them.

Do not be careless with tools and equipment.

Use These Tips to Avoid Construction Fraud

In order to avoid construction fraud, you should avoid removing equipment, change orders, bill for unperformed work, and falsifying orders.

Are you in need of a lawyer to avoid a construction fraud suit? If so, we’re here to help. Learn more about us and the type of defense we do.