Counterfeit construction goods can lurk on construction projects at home or abroad, as safety officials at Fluor recently discovered during a routine audit in Mozambique.

While conducting the review last August, auditors found an inventory of fraudulent respirators, according to David Taylor, director of health, safety and environmental for Fluor's procurement unit, AMECO, during a phone interview.

Clever labeling on the box evaded purchasers. "On the box is 3N—not 3M," he said, referring to the St. Paul, Minn.-based supplier. The packaging otherwise appeared authentic—it even displayed 3M's address in St. Paul.

Counterfeit, fraudulent and suspect items (CFSI) such heavy-duty valves can cause catastrophic failure in a refinery, and fake safety gear can harm workers or even kill them. "People think they are protected, and most likely they are not," Taylor explained.

The problem of CFSI is huge and growing. Large-scale construction projects regularly suffer from fake goods such as valves, pipes, electrical wiring, bolts and others, but few firms have taken steps to mitigate the threat, according to research group Construction Industry Institute.

"The breadth of the counterfeiting issue is just stunning," said Daniel B. Hogan, project director for the U.S. Dept. of State's Overseas Building Operations and CII member. "There is nothing safe."

Out of 67 owners, contractors, engineers and other companies responding to a CII survey, 28% said they had been victims of counterfeiting, according to a new report titled "Mitigating Threats of Counterfeit Materials in the Capital Projects Industry." Hogan and a panel of experts presented the study at CII's annual meeting held here July 21-23.

Lack of Reporting

Of the victims, 62% never reported such incidents to an external agency. While some researchers speculated that employees were afraid to report CFSI, the issue "is something that needs to be investigated further," said Max Casada, global QA/QC manager for Phillips 66 and study panelist.

Panelists recommended that firms develop a process to identify, document and communicate CFSI so they may better manage the risks. Finally, they said, CFSIs must be destroyed or turned over to authorities so they may be removed from the supply chain. CII's study offers guidelines, checklists and other tools to help the process.

CFSIs have the potential to cause dangers, delays and other costly problems. According to the study, single incidents cost companies between $100,000 and $28 million, while projects experienced schedule setbacks 83% of the time.

"Counterfeiting can happen to anyone," said Joe Gomen, a Chevron quality manager and study panelist. "No one is immune."