Draw Inspection

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Our new construction Draw Inspection is an on-site inspection that is conducted to verify the progress on a project. A&R acts as a neutral third-party in the new build funding process. It is generally conducted after a pay application (draw) is submitted by the borrower or general contractor to the lender. The purpose of a draw inspection is to verify that the amount requested on the draw coincides with the work that has been completed on site. A&R’s role is to verify and document the following:

• Security of the site, and stored materials
• Work currently being performed
• Progress of the build since the last inspection was performed
• Any delays, stoppages, or other complications in project execution

At the conclusion of the inspection, our inspector will address any discrepancies with the general contractor to discuss possible overbilling, solutions, or justifications before reporting to the lender. Time is crucial for all parties involved in the build process, and A&R will make every effort to keep the process moving as seamlessly as possible. To learn more about the draw inspection process, refer to the FAQs listed below, or contact us at your earliest convenience with any questions you may have.

Q: What can contractors do to speed up payment?

A: Avoid overbilling -

When a contractor overbills, it will be discovered during the inspection, and the draw will require revision. This delays the documentation process and slows down payment. Best practices suggest submitting draw requests only for the work that has been completed, or will be completed by the end of the billing period.

Work with the inspector -

Understand that inspector is an unbiased third-party, and we have no interest in slowing down payment. It is not our position to challenge every draw. Our goal is to protect the bank and project owner from being overdrawn on the loan. Working in cooperation with us will ensure the fastest results.

Full Disclosure -

Be honest about any issues that may slow down progress. Everyone involved in the project should be upfront about any delays or issues on the project, so that everyone involved knows what is going on. Lending companies can exercise measures to protect themselves if they are aware of problems. They cannot do that if they are not aware and find out afterwards. 

Q: What if the work completed does not match the draw?

A: When discrepancies arise, in reference to the amount of work claimed on the draw in comparison to what is complete on site, the inspector will first contact the general contractor about the discrepancy. Those discrepancies may be:

• Errors
• Delays in completing projected work 
• Possible overbilling 

If there are errors or possible overbilling, the general contractor will be asked to revise their draw request and resubmit asap. When a discrepancy arises and the general contractor feels that the billing is justified, A&R may request documentation to support the amount. If the general contractor substantiates their draw figures, the inspection will be completed, and the draw approved as submitted.

However, if documentation is not available or the GC and inspector come to an agreement on a different amount, the inspector will suggest a draw adjustment be made. The GC will then need to revise their draw documents and resubmit them to the bank and the inspector for approval and payment.

** Draw revisions can cause delays for everyone involved on a project.

Q: What is the inspector looking for?

One of the first things our inspector will take note of is the security of the site and any materials that are stored on site. The inspector wants to ensure that the work is secure and that no damage has taken place since the last inspection.

The inspector will also note how much work is currently going on. Is the job active or has work come to a stop for some reason? Work stoppages, delays, and other circumstances that might affect progress on the job will be noted on the report the inspector sends to the bank, so the lender is up to date.

The report also compares the work progress from the last inspection to current levels, so that the lender is aware of how much progress has been made. This helps the lender and inspector track the overall progress of the work throughout the project.

Finally, the inspector will look over the job site comparing the work progress to the amount of work billed on the draw. Most draws are billed on a percentage of completion basis, so the inspector will be comparing that percentage to what is observed on site for each line item on the draw. Small discrepancies may be overlooked.

However, if the inspector sees a larger problem with the claimed work, they will attempt to address it with the general contractor prior to notifying the bank.