Like a mighty river is the summation of many trickles, springs, creeks, and streams, the savings become a torrent of costly mistakes avoided, tax exemptions captured, incentives maximized, backcharges collected, invoice errors corrected, overcharges eliminated, and other savings methods. Beyond construction auditing, there are tremendous opportunities in the areas of taxation, incentives, financing, equipment procurement, systems integration, maintenance contracts, and ongoing operations, which fall within the purview of comprehensive capital project reviews. The rewards for owners in capital-intensive industries from implementing comprehensive capital project and construction auditing have been so significant that their engineering or internal audit departments have separate units responsible for performing audits. The savings and cost recoveries generated by construction auditors usually exceed the costs of the entire internal audit department. The state law designates that the contractor is the consumer and therefore the party responsible for the tax.
Contractors are subject to a host of arcane regulations.
Furthermore, the revenue statutes, regulations, and court rulings take away manufacturing and other exemptions by narrowly defining them. In this environment correct administration of taxes is difficult. The imposition of these taxes on contractors results in recoverable taxes buried in contracts, particularly electrical and mechanical subcontracts. The good news is that software applications make recovery of taxes within contracts achievable. Although not recoverable by the contractor, taxes are a source of savings for the owner that can gain the contractor some good will.