The simplest reason for construction draw inspections is to follow along with the builder so that you can ensure the loan proceeds are going into the collateral on the loan, and to identify potential project delays or issues as early as possible.
#1 What is a Construction Draw Inspection?
In a construction draw inspection, the lender hires a professional 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, check the accuracy compared to the original draw request, and review the budget.
#2 How Does a Draw Inspection Help to Keep a Construction Project on Track?
A construction lending best practice used by most lenders is ordering draw inspections to validate progress in conjunction with disbursing funds. Draw inspections follow along with the builder so that both the project owner and the lender can ensure the loan proceeds are going into the collateral on the loan, and identify progress concerns as early as possible.
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 preparing change orders that can modify the scope of the project.
#3 What Happens if An Issue is Found With the Draw Inspection?
Occasionally, discrepancies are found by the inspector. If a draw inspector notices discrepancies between the request and their on-site observations, they can reach out to the project manager and work towards ironing out these issues before the builder proceeds to the next stage.
To resolve the issue, the contractor may have to revise the draw request to match the inspector’s findings. On the other hand, the builder can justify their initial amount request by providing complete documents. If everything is in order, the draw inspector can approve the draw request. A revision to a draw request is never ideal. It typically means delayed payments to everyone on the payment chain.
#4 What Can a Contractor Do to Reduce the Need for Revisions?
For everything to go well throughout the construction process, builders will have to come up with a draw request that reflects the actual completed work. An accurate request avoids delays in fund dispersals and ensures that builders get paid in a timely manner.
It’s also important for the builder to collaborate closely with the draw inspector. From granting access to the construction site to providing important project documents, helping the draw inspector to do their work helps fast-track draw requests and ensure that the project gets completed in time.
There are a few things the contractor can do to reduce the risk of revisions to draw requests and help everyone get paid on time.
- Plan ahead — Thorough planning keeps the construction project on track and will help the inspection go smoothly.
- Work with the inspector instead of against them.
- Avoid overbilling.
- Be upfront with any delays or issues.
- Keep a line of open communication with the inspector and lender.
Keep Your Construction Project on Track with McSteen
With 50+ years of experience in the construction industry across all 88 counties in Ohio, McSteen 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 for more information or to get started.
