🇦🇺Australia

Subrecipient Cost Overruns

2 verified sources

Definition

Managing Contractors charge lump sum fees plus actual subcontractor costs (up to cap), with client approval needed for rejections. Poor monitoring causes overruns in preliminaries (crane hire, supervision), indirect costs, and scope changes.

Key Findings

  • Financial Impact: AUD 50,000 - 500,000+ per project overrun (management fees 5-10% of costs, preliminaries 10-20% excess)
  • Frequency: Per project milestone or contract variation
  • Root Cause: Manual open-book tendering of subcontracts, lack of real-time cost tracking, inadequate client-contractor consultation on subcontractor selection

Why This Matters

The Pitch: Urban Planning firms in Australia 🇦🇺 incur AUD 100,000+ overruns per project from poor subrecipient cost controls. Automation of open-book verification eliminates this.

Affected Stakeholders

Procurement Managers, Contract Administrators, Infrastructure Planners

Deep Analysis (Premium)

Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Subrecipient Compliance Penalties

AUD 10,000 - 100,000+ per non-compliance incident (audit disallowances, penalties); 20-40 hours/month manual monitoring per subrecipient

Planning Agreement Non-Compliance Fines

AUD 10,000 - 50,000 fines per breach; 1-3 months project delays costing AUD 100k+

Grant Compliance Penalties

AUD545 per late BAS lodgement (minimum penalty); up to AUD5,500 for repeated failures

Remediation Cost Overruns

20-40 hours/month manual reporting; 20-30% project cost overrun (typical AUD50,000-200,000 per site)

Delayed Grant Reimbursements

60-90 days high Accounts Receivable; equivalent to 2-5% project financing cost

Community Grants Non-Compliance Fines

AUD 100,000+ per uncontracted project returned to Budget; typical grants AUD 119,105 - 144,120[1][3][4]

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