Our Methodology   Typically, cost segregation is achieved using one of two approaches: the Invoice Approach or the Engineering Approach. The Invoice Approach involves a detailed analysis of construction cost records (i.e. invoices, applications for payment, etc.) to determine the proper classification of assets. While this approach is effective in some cases, it will not net the most beneficial cost segregation study most of the time. For instance, if a building is purchased, rather than constructed, there is a very good chance that little or no cost records exist in the hands of the current owner. Also, in the case of constructed facilities, contractors do not normally provide enough detail to adequately segregate assets in a way that will maximize the owner's tax depreciation. The Engineering approach is based upon a detailed review of all construction drawings and specifications, when such documentation is available. In some cases, such drawings and specifications are not available, in which case a qualified cost segregation analyst can conduct an in-depth site visit to analyze the facility. At Construction Economics, we employ a blend of the Invoice Approach and the Engineering Approach to maximize the building owner's depreciation benefits, while providing a detailed audit trail to support our findings in the event of a revenue agent's examination.