A draw inspection is only as thorough as the inspector conducting it. For lenders who want to understand what a quality draw inspection should cover, or who are evaluating whether their current monitoring program is adequate, this checklist covers the specific items an independent inspector should verify before each construction loan disbursement.
This checklist reflects what Innergy Integral’s inspectors verify on every draw inspection for lenders across the Pacific Northwest and the Southwest. It is organized by phase: pre-inspection document review, the site visit, the draw request reconciliation, and the report.
Pre-Inspection: Document Review
Before visiting the site, the inspector should review the documents that will anchor the inspection findings.
Draw request package. Review the borrower’s complete draw request, the schedule of values with claimed percentages, contractor payment applications, stored materials claims, and any supporting documentation the borrower has included.
Prior inspection reports. Review the reports from all previous draw inspections on the loan. Understanding the project’s documented history, what was observed at each prior inspection, what concerns were raised, what progress has been certified, is essential context for the current inspection.
Approved change orders. Review all change orders approved since the last inspection. Changes to the contract scope affect the schedule of values and must be reflected in the current draw request. Draw requests that do not account for approved change orders are incomplete.
Lien waivers. Confirm that conditional and unconditional lien waivers are included for the GC and major subcontractors, covering the prior draw period. Missing or incomplete lien waivers should be identified before the site visit so the borrower can be notified.
Project schedule. Review the current project schedule, the baseline and any updates, to understand where the project should be relative to the draw request. A draw request that claims progress inconsistent with the schedule warrants scrutiny.
Site Visit: What the Inspector Verifies
The site visit is the core of the draw inspection. The inspector walks the project systematically, documenting conditions and assessing progress by line item.
Overall site conditions. Note the general state of the site, active or inactive, number of workers present, visible material deliveries, site organization, weather protection for materials, and any visible safety concerns. A site with no workers, no equipment, and no recent material deliveries that is claiming significant progress in the draw request is a red flag.
Foundation and concrete work. Assess the percentage of concrete work complete, footings, slab on grade, elevated slabs, walls. Concrete work is typically an early draw item; verify that what was previously certified as complete is in fact complete and that no work is being double-counted in the current draw.
Structural framing. For wood-frame projects, assess the percentage of framing complete by building and by floor. For concrete or steel structures, assess the structural frame completion including post-tensioning, reinforcing, and structural connections. Framing is often the largest single draw item and warrants careful verification.
Roofing and exterior envelope. Assess the percentage of roofing, sheathing, weather barrier, windows, and exterior cladding complete. Exterior envelope completion affects weather protection for interior work, projects where interior work is proceeding without adequate weather protection are accumulating risk.
Mechanical, electrical, and plumbing rough-in. MEP rough-in is among the most difficult items to assess without specific trade knowledge. The inspector should confirm the percentage of rough-in complete by trade, ductwork, piping, conduit, against the draw request. Rough-in that is claimed at 80% complete should look like 80% complete rough-in in the field.
Insulation. Assess the percentage of insulation installed. Insulation is typically installed after framing and rough-in are complete; draw requests that claim insulation progress ahead of the trades that must precede it are inconsistent.
Drywall and interior finishes. Assess drywall hanging, taping, and finishing as separate line items if they appear separately in the schedule of values. Interior finish work, flooring, paint, cabinetry, fixtures, is typically later-phase work and should be assessed against the overall project schedule.
Site work and landscaping. Assess the percentage of site work complete, grading, utilities, paving, and landscaping. Site work is often split between early work (excavation, underground utilities) and late work (paving, landscaping). Verify that the claimed percentage reflects both phases appropriately.
Stored materials. If the draw request includes a claim for stored materials, materials on site that have not yet been installed, verify that the materials are physically present on the site and that they are in a condition consistent with the claimed value. Stored materials claims without materials on site are a common fraud indicator.
Equipment and fixtures. For projects with significant mechanical equipment or fixtures, data centers, specialized commercial projects, verify that the equipment claimed in the draw request has been delivered and is on site or installed as claimed.
Draw Request Reconciliation
After the site visit, the inspector reconciles observed progress against the draw request.
Line-by-line comparison. For each line item in the schedule of values, compare the inspector’s percentage-of-completion assessment against the percentage claimed in the draw request. Line items where the claimed percentage exceeds the observed percentage by more than a minor rounding difference warrant adjustment.
Disbursement recommendation. Calculate the disbursement amount supported by verified progress, the inspector’s assessed percentages applied to the budget line items, less prior disbursements. When the supported amount is less than the requested amount, the disbursement recommendation reflects the supported amount.
Cost-to-complete check. Add the estimated cost to complete all remaining work. Compare that total against the remaining undisbursed loan balance. If the cost-to-complete estimate exceeds the remaining balance, document the shortfall clearly.
Lien waiver confirmation. Confirm that lien waivers are complete and properly executed for the prior draw period. Document any deficiencies.
The Inspection Report
The report documents the inspection findings in a format suitable for loan file retention.
The report should identify the project, the inspection date, the inspector, and the draw number. It should include the site conditions narrative, the line-item progress assessment, the draw request reconciliation, the disbursement recommendation, the cost-to-complete analysis, lien waiver status, and any concerns or observations that the lender should be aware of. The report should be specific, using project-specific language, not boilerplate, and should provide the evidentiary basis for the disbursement decision.
A lender whose loan file contains thorough, consistent draw inspection reports from every disbursement is in a strong position in a regulatory examination. A lender whose file contains generic, checkbox-style reports that do not document specific findings is not.
Using This Checklist to Evaluate Your Monitoring Program
Lenders who are evaluating whether their current monitoring program is adequate should compare what their inspection reports contain against the items on this checklist. Reports that do not document site conditions by trade, that approve draw requests without line-item reconciliation, or that do not include a cost-to-complete assessment are not providing the lender with the information they need.
Related: Construction Loan Monitoring · Draw Inspection Services · What Is a Draw Inspection · Construction Loan Monitoring Guide
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