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Combatting Construction Fraud

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Start DateVenue1 Week2 Weeks

Request a dateLondon 2,500 3,750
Request a dateDubai 2,500 3,750

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According to the Association of Certified Fraud Examiners (ACFE) 3.4% of all reported fraud cases, over a two year period up to December 2011, were attributable to the Construction industry.

The presence of fraud and corruption in Construction can take many forms; from falsely representing the numbers of hours a contractor works, through to collusion when bidding for contracts or paying bribes to secure a contract. These inevitably increase costs and, in the case of bribes, inflate the contract price.

More companies need to wake up and recognise that fraud and corruption costs, in terms of profits and a company’s reputation. It’s a real threat to growth!

Why you cannot miss this event

By attending this course you will understand fraud undertaken by phase of construction, why it goes undetected and how to assess the risk of construction fraud on your own projects.

Moreover, you will learn practical prevention practices, how to protect you and your organisation from the consequences of corruptive behaviours and you will be able to deal with and address the difficulties related to construction fraud in order to safeguard the assets and resources of your organisation.

Course Objectives

Understanding what fraud is
Identifying red flags of construction fraud
Understanding what construction fraud entails at each phase
How to prevent fraud upon detection: at the procurement phase; at the supply chain phase and the construction and completion phase.
What processes can be introduced to reduce the threat of construction fraud
Taking the appropriate steps on risk management and fraud detection
Strengthening the internal controls and the compliance programmes. 

Fraud Principles

What is Fraud?
Fraud Detection: Responsibility 
When, How, by Whom fraud was committed?
Fraud Triangle – Fraud Diamond
Profile of Fraudsters
Red Flags

Characteristics of Construction Fraud

Not necessarily a single department’s problem
It is more than ‘cooking the books’
It can be perpetrated via various collusion mixes
Difficulty in detecting construction fraud
Need for a construction fraud strategy

Fraud Schemes 

Non-payment of subcontractors and material suppliers.
Billing for unperformed work.
Manipulating the schedule of values (SOV) and contingency accounts.
Diverting lump-sum cost to time-and-material costs.
Substituting or removing materials.
Change order manipulation.
Falsifying payment applications.
Subcontractor collusion.
Diverting purchases and stealing equipment or tools.
False representations.
Case Studies
Red Flags of Schemes involving collusion among contractors, sub-contractors and employees

Fraud in the Contract Performance and Administration Phase

Product Substitution
Mischarges: Accounting, Material and Labour
The Corrupt Recipient
The Corrupt Payer.
Kickbacks Schemes

Work group

How does construction fraud affect your organisation and the bottom line? 
What are the construction fraud risks in the supply chain process?

Session 1. Fraud Risk Assessment

Approach to risk management: Definitions
Risk and culture
The COSO Framework for Enterprise Risk Management

Risk Management

The Sarbanes-Oxley Act (SOX)
Risk identification
Management of risk

Fraud in Selected Areas

A model for controlling contracts
Gifts and entertainment in construction fraud
Organized crime in construction
Bid rigging
Disadvantaged Business Enterprise programs and other set asides 

Construction Fraud Detection

Steps for encouraging fraud detection
Why managers and auditors don’t detect construction fraud
Building fraud detection into your audit and management practice
Exposures and symptoms of fraud occurrence
Understanding behavioral red flags of construction fraud
Using data mining to detect construction fraud
Fraud implications of spreadsheets

Construction Fraud Investigation

Understanding the investigative process
Elements of a complete investigation
Barriers to responding to suspected construction fraud
Investigative perils and pitfalls and how to avoid them
Investigation tips and techniques
Suggestions for proving suspicions and allegations
Fraud investigation checklist and supplement for contractors and vendors
Using a personnel spreadsheet
Proving kickbacks
Internal Control Review Report Matrix

Monitoring and Review of Construction

Unannounced audit
Review of work progress
Review of completed work
Review of materials, quality and suppliers
Cost over-runs, delays and non-compliance

Case study/Work group

Identifying steps to detect construction fraud in own organisation
Actions required on fraud detection
Anti-Fraud and Anti-Corruption Compliance Program


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*Course fee is not inclusive of VAT

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