Client Profile
| Industry: | Pharmaceuticals | | Annual Revenue: | $17 billion | | Geographic Footprint: | International | | Ownership Structure: | Corporation | |
Issue
A pharmaceutical company was preparing to build a $55 million lab and office space. Its contractor was to perform the work under a cost-reimbursable contract, whereby the pharmaceutical company would be billed for the cost of the work performed in addition to a fee that would cover the contractor’s profit and overhead up to a guaranteed maximum price.
Solution
CBIZ Risk & Advisory specialists helped the pharmaceutical company review the draft contract before it was signed to limit the company’s financial exposure and protect it from various overstated costs. This allowed our team to recommend changes that would better guard against hidden profit centers and expenses that should have otherwise been covered by the contractor’s fee.
During our initial audit, CBIZ identified overstated costs that related to sub-contractor labor rates. There were also markup issues. When cumulated, the totaled subcontractor markups exceeded the aggregated markup that was included in the contract. Our findings presented an opportunity for the company to recover upwards of $90,000 in project fees.
Outcome
The factual cost data we provided helped the company make informed business decisions, on a timely basis, regarding the construction project. To date, the company has recovered $90,000 with future project savings anticipated.
Don’t be Surprised by Construction Costs
Learn how our team can help you stick to your project budget.
Download our case study
Copyright © 2016, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.
CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).