Job Filings Receive Greater Scrutiny from DOB Cost Validation Unit

By Liliana Ovalles

Since Fiscal Year 2010, the Department of Buildings (DOB) has maintained a Cost Validation Unit. This group provides research and technical support for construction cost and permit fees. While the unit’s responsibilities have always included auditing “a sample” of approved alteration applications, their audit activities have become more robust.

DOB Project Valuation Standard

The DOB uses RSMeans data as a standard reference for assessing the value of a project. RSMeans publishes a wide range of cost data books, including electrical costs, concrete and masonry costs, interior costs, labor rates, mechanical costs, plumbing costs, etc. Also, these guides are updated frequently. In other words, staying abreast of this industry standard requires ongoing diligence.

The DOB has always assessed project costs against the agency’s standard valuation as part of the review process. Under-reported projects receive an objection. Resolving the objection requires either revising the PW-3 Cost Affidavit or submitting a detailed estimate using RSMeans or another standard cost tool.

More Audits, More Discrepancies

Lately, the Cost Validation Unit has been auditing more DOB filings for discrepancies between the PW-3 and the current RSMeans standard. As a result, we’re seeing more Construction Cost Affidavits – Notice of Audit Fail and Fees Due. If the project costs are under-reported, the DOB is taking steps to collect the outstanding fee balance.

Projects that fail the cost validation audit require submission of a revised PW-3 and payment of the fee balance. Alternately, the audit can be appealed by providing a detailed cost estimation using RSMeans, or a similar, professionally recognized standard for construction cost data.

Failure to resolve the valuation discrepancy can result in revocation of approved construction documents and permits.

If you have questions on this subject, or need assistance determining the appropriate RSMeans reference for your project, contact Metropolis Group at 212.233.6344.