When highlighting contractor fraud we I find it necessary to illustrate a definition of fraud to aid you in determining if a particular situation represents fraud. One insightful definition is ‘the willful manipulation and / misrepresentation of information for the personal gain at the cost or expense of another. Key words being willful, personal gain and another expense. Adding to this Contractor Fraud has been a concern in the Construction Industry even before the term Contractor was coined.
Myttcontractors has realized that Contractor Fraud has stigmatized the construction Industry and formed one of the pillars around the ideology of the site. We prequalify and pre-assess all our contractors so you don’t have to and you can feel safe that any contractor choosen from Myttcontractors represents a certain caliber of Contractor.
We have provided a few tips to help prevent Contractor Fraud
1. No Advance payments on labour only Contracts – Contractors must not be paid in advance of their performance. Labour payment is based on manhours and paying in advance means given money for no time rendered. Contractors can renege on the job without having to do any work and you would have been out of pocket.
2. Pay your suppliers Directly – Some projects managers (professional of non-professional) may send cash payments for suppliers with contractors. While most contractors can be trusting the possibility of fraud can occur if the contractor decides not to pay the supplier and withhold the funds for themselves. You can then be left with an unfinished project and an unpaid bill.
3. Approve all orders from suppliers – Contractors have a tendency of ordering excess materials or supplies that may not be related to your project. Cases of fraud will be you having to pay for good or services that never made it to your project. Ensure that all orders are approved by yourself and also verify that they are delivered and used on your project site.
4. Pay based on Milestones and not day rate – while paying a day rate for work done may not necessarily be you be defrauded it can be an issue where a weekly salaries are being paid for little or no progress.
5. False Certification – This is an element of contractor fraud as certain job requires special certification and in an effort to win a particular job or even charge a higher rate, contractors may falsify documentation. Ensure where certification is presented they are verified before any contract is awarded.
