It’s not just developer and investor’s equity at stake when a construction project undergoes development, in most cases, lending institution provide loan capital for building a project. Thus, achieving set budgets is an important requirement for all investing parties involved.
To ensure cost concerns are appropriately met, lending institutions require a project monitor/cost consultant to monitor the progress of construction, review invoicing, and approve progress lending monies.
Typically, a lending agreement (commitment letter) requires a Construction Loan Monitor, typically a quantity surveying firm with experience in construction and contract administration. And the cost expertise provides a comfort level for the parties involved.
As a Construction Loan Monitor, many QS firms will review and provide expertise regarding:
- If payments to trade workers and suppliers are being made on time
- If the budget reflects the complexity and demands of the work
- If the loan agreement is being met
- If the project is proceeding on schedule
- If the project is properly funded
- If construction is in compliance with drawings and specs
- If there’s enough money left to complete the construction project
Typically, an experienced QS consultancy firm provides full-service cost planning service inclusive of an Initial Project Review (which lenders review for budget usage and effectiveness) and ongoing Project Draw Reports (detailing cash requirements for paying invoices accrued during the period, amount remaining in the project, and project status).