What is a Construction Draw Inspection

Legal Article

What is a Construction Draw Inspection

A construction draw inspection is a job site inspection conducted by a third party to determine the progress of the project. The most common reason why a construction draw inspection is conducted is that a bank or other type of lender wants to review or confirm the work that has been completed on the project. Further, lenders utilize this tool to ensure that the requested draw amount matches the work completed on the site.

An industry-specific expert will conduct this inspection, which determines the cost and process of a project. As the construction draw inspection is necessary to receive draw payments, working and coordinating with the inspector assigned to your job site is in your best interest.

Below is a general overview of construction draw inspections, what to expect during the inspection process, and how to make the process quick and easy.

What Should a Contractor Expect During an Inspection

After the bank or lender schedules a draw inspection, the inspector should contact the job site superintendent to schedule a visit. However, be aware that the inspector will want to schedule a visit as soon as possible. During the actual visit, the superintendent should expect to spend some time with the inspector. Most of this time will consist of a job site inspection and answering any questions that the inspector has. These questions most commonly focus on work that has been completed, upcoming schedule, and potential delays.  Finally, the inspector will take photographs to document the progress and stored materials on the job site. These photos—while not the main reason for the inspection—go in the inspector’s report to the bank.

What the Inspector is Looking for

In most cases, the first thing that the inspector will look for during a draw inspection is the security of the job site and the materials on the site. The reason for this is that the inspector wants to ensure that the job site is secure and materials on the job site are not at risk of theft. Further, the inspector will also note how much work is going on at the job site. This is mainly to determine if the work is moving along as expected or if the job has stopped for some reason. The inspector will have the make note of any stoppages, delays, or other circumstances affecting the progress of the job before sending the report back to the bank or lender.

Next, the inspector will make note of job progress compared to their last visit to the site. This assists in the bank’s or lender’s ability to track the progress of the job.

Finally, the inspector will compare the amount of work done and materials on the site to the amount of work billed on the draw. Most draws are billed on a percentage of completion basis. Further, the inspector will be comparing that percentage to what is observed on the site. The inspector will expect small differences to be present between the draw and the actual job. However, if a large discrepancy is present, they will discuss this with the general contractor or superintendent before sending the report to the bank.

What if the Work Completed Doesn’t Match the Draw

If there is a discrepancy present between the amount of work claimed on the draw and what work has actually been completed, the inspector will speak with the general contractor or superintendent about the issue. These discrepancies most commonly occur from an error, a delay on the work, or overbilling. If the discrepancy is due to overbilling, the general contractor or superintendent should revise their draw and then resubmit it. However, if the general contractor or superintendent feels as though the billing is justified, they must submit supporting documentation to the inspector. If the documentation properly supports their claim, then the inspector will finish the report and approve its submission.

However, the documentation that the general contractor or superintendent provides may not support their claim. In this case, the inspector will suggest creating a new draw agreement before resubmitting it to the bank.

What Can Contractors do to Speed up Payment

Below are a few ways that general contractors and superintendents can make the inspection process fast and easy.

Avoid Over billing

If a contractor overbills, the inspector must revise and resubmit the draw to the bank. This delay is one of the most common reasons that slow down the payment process. Thus, it is best practice to submit draw requests only for the work that has already been completed.

Support the Inspector

One of the most common mistakes general contractors and superintendents make is thinking that the inspector is their enemy. The inspectors are not there to challenge your draw claim. Instead, they are simply trying to ensure that the loan will not be overdrawn. If you work to help their process along, they are more likely to support your claim.

Be Honest

Next, ensure that you are honest with the inspector about any current or potential issues that could delay the project. This applies to not just the general contractor or superintendent but to everyone involved in the job. If you work with the inspector about any issues you have, they can make the delay as simple as possible.

Final Thoughts

Construction draw inspections are an important part of a lender’s ability to ensure that the loan amount is correct. Further, these inspections ensure that the draw amount matches the work completed.

Further, working with the inspector is the best way to ensure that you will continue to receive payments on time. Thus, make sure to build a strong relationship with the inspector if you want your construction project to go smoother and payments to arrive faster. With over 20 years of experience, Antonoplos & Associates construction attorneys can help construction company owners, contractors, subcontractors, material suppliers, architects, and designers with a wide range of services before, during, and after a construction project in DC, Maryland, and Virginia.

Contact Our DC Law Office for More Information

Finally, for more on what is a construction draw inspection, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding construction law, check out our blog.