Few initiatives undertaken by a healthcare organization hold as much risk as large capital projects. Yet risk management often falls by the wayside after the contract is signed and construction is underway. One of the most overlooked areas of risk in these projects is unknowingly paying more than should be paying under the contract terms.
This was the scenario at a large medical center in Manhattan where the Capital Facilities department was entering into a $375 million contract for the development of a biomedical research building. Fortunately, the center’s internal audit professionals reviewed key terms of the contract before it was signed and recognized the need to have skilled Construction finance professionals review the monthly progress billings and monitor costs and the change order process through the duration of the project.
The comprehensive case study can be downloaded here.