It’s estimated that in 2013 fraud and corruption in the global construction industry cost taxpayers and developers $860 billion. By 2025, the annual tab could reach $1.5 trillion. (“Global Construction 2025.” Global Construction Perspectives and Oxford Economics, 2013.)
Integrity monitoring is the proven solution to this challenge. Thacher Associates, which K2 Intelligence acquired in 2012, was the first firm focused on it. We remain the leader, with decades of experience overseeing the full spectrum of public and private construction projects, including many infrastructure initiatives.
A monitor works for a project owner, whether a government agency or private developer, to minimize fraud, waste and abuse and assure compliance with relevant laws, regulations, and policies.
For government agencies, the efforts promote efficient and appropriate delivery of taxpayer funds. For private-sector owners, they protect the finances, operations and reputations of all stakeholders. The oversight by a reliable, independent entity producing its own reports fosters transparency and accountability, enhancing public confidence.
Monitoring can work in one of two ways:
- As an independent private sector inspector general appointed by a government agency or private owner to monitor a specific contractor. The arrangement is imposed on the contractor as a condition of doing business with the public or private owner.
- As a project integrity monitor brought in by a government agency or private developer to promote compliance with requirements regarding all work on a construction project.
In either case, the emphasis is on preventing problems before they arise. When they do crop up, there may be significant recoveries because the schemes can be discovered in real-time, as they’re unfolding.
Our objectives are aligned with those of the agency or developer managing the construction—building on time, within budget, and without financial or reputational scandal.
Monitoring Typically Proceeds Through Three Phases
First, we identify the corrupt or wasteful practices most likely to delay, derail, or embarrass, in terms of both impact and likelihood. We focus on systemic problems. This process may entail contract reviews, background checks, investigations, and audits.
Next we assess the controls in place to mitigate those risks. This approach enables our client to avoid wasting limited resources on areas of minimal concern or risk, while maximizing focus on issues of greatest concern.
After assessing the potential for fraud, waste, and abuse, our teams can implement solutions through steps such as:
- Bringing transparency and accountability to business transactions
- Enforcing, strengthening or establishing controls to deter, prevent and detect problems
- Creating a culture of compliance and accountability through training and audits
- Rehabilitating companies when problems occur