Is Your Construction Firm an Easy Target?
 

No company is safe from fraud. Some frauds are crimes of opportunity. The majority of them, however, are the result of long hours of planning and effort. Construction firms are particularly vulnerable to fraud because most are small companies that lack the resources to put extensive controls in place. 

Some of the most common frauds that impact construction companies involve employees who:

• Create fictitious vendors and pocket payments made for nonexistent materials or services.
• Forge signatures or endorsements or alter payees or amounts on company checks.
• Take kickbacks.
• Inflate invoices.
• Manipulate payroll by creating ghost employees or overstating hours worked.
• Abuse company credit cards or pad expense reimbursements.

You can help protect your business from fraud by employing several of the following strategies.

Divide Duties
Don't have the same person handle deposits, check writing, and bank account reconciliations. Require two signatures on checks, at least for your payroll checks (and large disbursements). In addition, have one employee review payroll data entered into your system by another employee or employ and independent payroll service.

Monitor Bank Statements
You, or another principal, should receive all bank statements unopened. Review them promptly and look for any unusual items. Also make a habit of reviewing account activity on line.

Review Payroll
Review paychecks to be sure they include the appropriate deductions for taxes and other items. Now and again, scrutinize payroll records for evidence of duplicate names, addresses, and Social Security numbers.

Require Authorization
Require authorization and approval of transactions within certain dollar limits, such as purchase orders and credit card charges. Scrutinze all new vendors added to the system.

Employ a Check-In/Check-Out System
Require all employees to sign in and sign out every tool, vehicle, or piece of equipment they use. Add an additional layer of security by requiring written requests for materials and supplies and insist on receipts for all returned items. 
 

Hire the Very Best

It can be expensive to add an employee. Figure in advertising costs, time spent reviewing résumés and interviewing candidates, testing, and training and you're soon looking at several thousand dollars. However, it can cost considerably more if you make a bad hire. Hiring the wrong person for the job means you'll have to incur all those recruiting costs at least one or more times.

What steps can you take to help ensure you'll hire only the very best employees? Here are some strategies that can help you reach that goal.

Define the Job

Know exactly what you need. Start by analyzing the position's requirements and responsibilities, identify the training and skills required, and consider what personality traits are needed to do the job successfully.

• Does the position require someone with an outgoing, positive personality?
• Will the new hire be in a supervisory position and be required to motivate others?
• A careful review of a candidate's job history and your own observations at the interview can help you decide if a job candidate has the required personality traits to do the job successfully.

Cast a Wide Net When It Comes to Advertising the Position

• Contact your local community college or trade school and let them know of the opening.
• Tap into your network of subcontractors, suppliers, and friends to ask them to recommend candidates.
• Look into advertising the job opening on construction-related websites and blogs.
• Advertise in newspapers based out of your region or state, especially if construction activity in these areas has been weak.

Carefully Prepare Your Interviews

Plan ahead. You want each interview to provide an objective insight into the skills, personality, and work ethic of the interviewee.

• Structure each interview the same way, give each candidate the same amount of time, and use the same scoring system across the board. Reread each candidate's résumé before the interview, and tailor your questions to each candidate's skills and related experience.
• Make liberal use of open-ended questions.
• The candidate, not you, should do most of the talking. However, don't let candidates get away with broad generalizations - always press for specifics.