In any commercial real estate construction project, following established processes protect everyone involved. Today, we’re going to tell you all about one of these processes; the bank draw inspection and why it benefits everyone involved – not just the lender.

What Are Bank Construction Draw Inspections?

A construction draw inspection is a process that all lenders use to monitor construction loans. It verifies that the amounts requested in a payment application are consistent with the progress on the job site.

Basically, trained and certified inspectors check on the construction site. They are looking at:

  • Where in the timeline the project is
  • The accuracy of the project to the original draw request
  • Evaluate the budget based on the point in the timeline
  • Identify and check stored materials on site

Why Is A Construction Draw Inspection Important?

A construction draw inspection is important because it helps mitigate risks related to the project’s timeline and budget.

Tracking Progress

A draw inspection allows the bank to know if the progress at the construction site is advancing according to the timeline. Based on its results, the risk mitigation company can disperse funds to the contractor, or hold a payment if a certain milestone hasn’t been achieved yet.

Managing Funds

Asides from managing the project timeline, a draw inspection helps to account for all the money from the construction loan that goes into a project. The draw inspector accounts for all fund requests and will compare the line item to the on-site representation. He can also process change orders, and identify the total materials and services present.

What Do Construction Draw Inspectors Report On?

While construction draw inspections are usually performed by a third party hired by the bank, everyone can benefit from it. Here are some of the things draw inspectors report on:

  • Percentage completed of individual line items
  • Permit and inspection status
  • Test reports and third-party inspections results
  • Construction progress in relation to the current schedule

It’s important to remember that while third-party inspectors are meant to protect the lender, their observations also detail a streamlined process for payment. They will also provide a lot of insight to keep the project on track.

At InVision Advisors, we go beyond what is typically found in regular bank inspections. Our in-depth monthly site reports contain unique information including site security, manpower on-site, outstanding drawing/RFI’s and schedule/cost analysis. If you’re interested in working with a team that will add value to your project, contact us today.