There are a lot of processes and regulations involved in construction projects. Even smaller projects require such in-depth planning to execute. No matter the size of the project, though, progress drawdown reports are essential to completing the job. In today’s blog, we’re going to be diving into the particulars of the report and how progress claims fit into it.
What are they?
Put simply, a progress drawdown report is essentially a schedule that outlines the timeline of the entire construction project. The defining feature that separates this from other timelines is the fact that there are markers on this schedule that outline the funds that are needed at particular times.
The function of this report is so that the appropriate amount of funds is allocated to the builder in controlled increments – instead of a single lump. When this type of report is drawn up, it is to ensure that only the correct amount of funds is allocated. The correct amount is estimated by a qualified quantity surveyor.
Who prepares them?
Progress drawdown reports should be prepared by a qualified quantity surveyor – such as the ones at Section 94. Having a dedicated quantity surveyor to do all the estimating and planning gives you a huge advantage because if you’re the home-owner, you may not have the experience necessary, and if you’re the builder then you’ll have your plate pretty full with the rest of the project.
A quantity surveyor will work closely with the builder to ensure that every facet of the project is estimated accordingly and that there is no unnecessary expenditure in the budget. It’s not about using the cheapest materials – but using the most efficient and optimising the process for the builders.
Why are they so important?
There are several reasons why these types of reports are not only important – but also integral to a construction project. They help to ensure that the whole project runs smoothly and to schedule. They also work towards guaranteeing that the money is being used explicitly for what it’s meant to be used for – as per what was estimated by the quantity surveyor.
Another reason is that because the funds are released incrementally, it allows for the whole project to run to a tighter ship – allowing very little margin for error. By controlling the funds this way you’re also guaranteed more security being as builders are required to give proof of what they’ve completed so far before they’re allowed access to the next round of funds.
How do they relate to progress claims?
Whilst progress drawdown reports are great ways of keeping your construction project on schedule, you’ll still need to show proof that everything is going according to the planned report to receive the next payment increment. This is where progress claims become relevant.
Progress claims are invoices that itemise the work that has been completed on a building project to date. These are required so that the next increment of funds can be released to the builder – allowing them to continue their work. Progress claims should be shown to the homeowner as well as whoever is supplying the loans. Banks will usually pay the money directly to the builder – provided they qualify and meet the requirements.
Interest and construction loans
Depending on who loans you the money, you may only have to pay interest on what is allocated to you at a time – as opposed to the entire amount. So, if you get a loan for $100,000 but only use $75,000 by the end of the project, then you won’t have to pay interest on that remaining $25,000.
This is called an “interest-only period” and can run for a varying time at the beginning of the project. This is where construction loans come into the mix. Construction loans can be very handy when building a home or planning a renovation as they’re designed specifically for these purposes.
Do you need progress drawdown reports?
Whether you’re looking at starting a new construction or renovation project, you’ll need to have an effective progress drawdown report in place. Section 94 can help you will all your quantity surveying needs and ensure that your construction project is estimated appropriately. With years of hands-on experience, our fully qualified quantity surveyor’s will work with you to ensure that your needs are met. Some of our other services include section 94 reports and bank prefunding.