After high school, I pursued a career in the military, where I proudly served for seven years.

-Why not include a contingency line item in your construction loan rather than raise the contingency funds from your equity partners?

The only item I would suggest is double check the payment terms of the your HELOC... in particular, can you pay interest only or are you required to pay a portion of principle each month on the amount utilized.

They are a dual military couple so will use their other VA loan for their next house.They are willing to let us assume their current loan.

Regarding next steps, I agree that the best way to approach this would be to have one person act as boots on the ground and the other person handle the back office related items.

I would stop work until an itemized scope of work and cost to completion is established.

Here's a https://www.irs.gov/businesses/cost-segregation-audit-technique-guide-chapter-4-principal-elements-of-a-quality-cost-segregation-study-and-report to the IRS website noting specific items that are included in the cost segregation study report. hmm, that website is a 404 error.  

Improper reporting of big items such as mortgage interest. 

I have expierence in new construction, that's not a problem.Here is elaboration on the last 2 items:2.

The PM should provide itemized items of what was done.