Inflating early billing items to collect more money upfront than the work actually cost.
Front-loading is the practice of overstating costs in the early line items of a schedule of values relative to their actual cost, allowing the contractor to collect more money in early payment applications than the value of work installed. While providing a cash flow advantage, front-loading is prohibited by most contracts and creates risk for the owner if the contractor defaults. Owners and lenders review schedules of values carefully to detect front-loading.
The lender's inspector rejected the schedule of values and required the contractor to redistribute the mobilization line item from 20% to 3% of the contract to eliminate front-loading.
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