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In the construction industry, draw inspections are a best practice used by most lenders to validate progress in conjunction with disbursing funds. The lender hires a professional inspector to visit the construction site and assess progress. This allows the construction lender to follow along with the builder and project owner to ensure the loan proceeds are going into the collateral on the loan, and to identify progress concerns as early as possible.
The inspector is looking to show where the project is in relation to the timeline that was set out, checking the accuracy compared to the original draw request, and reviewing the budget.
Construction loans are not fully advanced at the time of closing, rather the lender advances an amount to pre-fund an ‘interest reserve’ account, which will be used to make the loan’s monthly interest payments until construction is complete.
When completing a draw inspection, the draw inspector visits the site and performs many specific tasks. However, the following components are critical to ensure the successful completion of the inspection:
A draw inspection helps to mitigate risks inherent to construction lenders through regular on-site inspections with experienced draw inspectors who become the eyes and ears for the lender on the job site.
Based on the findings of the draw inspection, the lender can validate the draw request, disburse the right amount of funding, and ensure that the funds do not go beyond what is needed by the project.
A good inspector makes everybody’s job easier by:
Construction projects, and, particularly, large commercial projects, can be complex to manage. A professional draw inspector is crucial to the long-term success of the project, using the right tools, knowledge, and certifications to get the job done quickly and reliably. Construction projects are funded by high-risk construction loans that require a long time to process. A construction draw inspector is typically hired by the lender to help ensure timeliness by identifying construction issues and preparing change orders that can modify the scope of the project.
Each construction inspection project that comes to CIS can vary in complexity. As such, we have a wide range of independent inspectors on our team with varying backgrounds including: general contractors, Certified Master Inspectors, construction managers, estimators, surveyors, architects, engineers and home inspectors.
Most projects are inspected by the same inspector throughout the life of the project. We feel this allows the inspector to have a full historical view of the project which we have found to be beneficial especially in the more complex construction projects.
Absolutely! We have found that having a wide range of inspectors with varying skill sets available to us, allows us to determine the appropriate inspector to assign based on the project’s complexity.
The use of unbiased, third party inspectors is vital as it provides a checks-and-balance system for construction projects, keeping the lender informed of the actual levels of completion of a project which helps to manage the risk of a loan not becoming upside-down and keeps the entire process at an arm’s length position. Additionally, they provide an objective opinion through the inspector’s knowledge of the construction process and experience in the field. Use of third party inspectors also offers another objective opportunity to analyze projects in an effort to help keep each one on schedule and within budget.
Depending on the time of receipt of the inspection request, we typically process requests the day we receive them. Our goal is always to have “boots on site” within 24-48-hours of receipt of the request. Upon receipt of photos and results from the onsite inspector, our well-trained in-house staff begins processing reports here in our office. Our goal is to have reports sent to the lender within two-four days of our receiving the requests.
Yes, we do provide all of the above services to our clients across the country. Our firm has many years of experience in performing these services for our lenders. Working with highly skilled construction estimators and project managers, we are able to develop costs for projects locally, regionally and nationally.
Yes, we provide both construction oversight and owner representation for our clients. The complexity of the project will determine the skillset that will be assigned to the site to perform the detailed scope of work.
With 25+ years of experience in the construction industry throughout PA and OH, Construction Inspection Services of PA is well-equipped to tackle your draw inspection needs. We get what you need fast to ensure there is no delay in funding a draw.
Contact us today for more information or to get started.
Construction Inspection Services of PA
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