If you’re lending on the development of a commercial property, construction draw inspections are an essential step to ensure your investment is sound.
What are construction draw inspections?
Draw inspections help to mitigate risks inherent to construction lenders through regular on-site inspections with experienced draw inspectors who become the eyes and ears of the lender on the job site.
Why is a draw inspection essential for a commercial project?
In the commercial construction industry, draw inspections are a best practice used by most lenders to validate progress in conjunction with disbursing funds. 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.
How do construction draw inspections work?
In a construction draw inspection, the lender hires an inspector to visit the construction site and assess progress. 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. They’re also likely to look at any stored materials kept on the site.
Draw inspectors visit the work site to evaluate current progress against what has been reported. They’re looking specifically to validate that all work items and materials included in a draw request are, in fact, in place, and assist in determining the appropriate release of funds. Based on the findings of the 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.
Construction draw inspections also help ensure a project follows the established timeline. The fact is that most construction delays are the result of funding issues. Construction projects are funded by high-risk construction loans that require a long time to process. A construction draw inspection helps ensure timeliness by identifying construction issues and reviewing change orders that can modify the scope of the project.
Why is a construction draw inspection important?
A draw inspection is important for a number of reasons, but essentially it ensures that all money on a construction loan is accounted for.
- It lets the lender know where the project is compared to the timeline they were given. Most risk mitigation companies insist on funds being given out based on the results of these draw inspections because they want to ensure that there’s no more money tied up than is necessary for the project.
- Draw inspections can also help track funds because the inspector has to account for every cost request and compare it to the on-site representation.
- Inspections are also important to the builder in that they ensure they are receiving payment for work completed so that they have the funds to continue on to the next phase of construction.
- Above all else, inspections are important for the project owner, to aid in the smooth and timely completion of the project.
With more than 50 years of experience in all 88 counties of Ohio, and now expanding to surrounding counties in Michigan, Indiana, Kentucky, and Pennsylvania, McSteen is a leader in the industry and 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.
- Simplified quoting with one statewide price per site visit.
- Professional report by our professional team, including a completed draw schedule and internal and external progress pictures.
- Two-step verification between our in-field inspector and in-office review.
Contact us today and let our team of surveyors, inspectors, and utility locating professionals ensure your project is properly planned for now and in the future.