Brian Pawluck is president of BKP Advisors, where
he provides turnaround and financial restructuring
services to companies, their boards, and creditors.
Most recently, he was a managing director at Duff
& Phelps and prior to that a partner at PwC LLP.
Pawluck has been involved in the real estate and
construction sector in a number of capacities and has
overseen the completion of condominium projects,
pipelines, and mechanical and hospitality projects.
documentation and compliance
during the course of a project.
An independent engineering
review of the status of the project
on a regular basis can provide
valuable and timely insight.
In this regard, it is important to
review the third-party consultant’s
monthly or quarterly progress reports
to gain insight into scheduling
delays, cost overruns, and regulatory
and contract compliance.
10 A lack of timely and accurate financial information.
When various projects are held
within one legal entity, a breakdown
of revenues and costs by individual
project is essential to identify
project winners and losers.
Inaccurate or inadequate financial
Watching for Signs
records can significantly contribute
to project failure. Lenders should
be aware of potential unprofitable
contracts before further construction
loan advances are made. On larger
projects, separate legal entities may
be set up for each project. Different
lenders may finance different
projects, and one lender may not
know what is happening on other
projects. In these situations, it is
important to regularly review the
parent company’s financial statements
in addition to the project financial
statements to see if the parent
(which provided a guarantee for the
loan) is funding another subsidiary
that may be in financial distress.
Paying attention to the warning
signs that a project is at risk of
incurring delays and cost overruns
can alleviate some of the stress felt
by owners or the capital providers
involved in the project. J
Any reference to relevant legislation
should not be construed as legal
advice. Readers are encouraged
to seek their own independent
legal advice with respect to
compliance with the law in their
jurisdictions. The author would like
to acknowledge the support and
input in preparing this article of his
former colleagues at Duff & Phelps.
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