What could be an indicator of loan fraud in construction projects?

Receiving no change orders can be an indicator of loan fraud in construction projects because it suggests that the project may not be proceeding as initially planned or that there may have been underreporting of the actual costs and changes needed during construction. In legitimate projects, change orders are common due to unforeseen circumstances, design modifications, or changes in project scope. If a contractor is not submitting change orders, it may raise concerns about the accuracy of the project’s financial reporting, potentially indicating that inflated figures are being presented to secure more financing than necessary.

Frequent change orders, while they might indicate instability in a project, do not necessarily suggest fraud on their own. Likewise, multiple bids for the same work could reflect a competitive bidding process, which is typical in construction management. Having a set deadline without extensions is more indicative of project management efficiency rather than a direct sign of fraudulent activity.