A bank prefunding report is an in-depth account that a quantity surveyor engages in on behalf of homeowners. The purpose of such a report is to seek financial approval for a construction project from the bank. Today’s article will be looking at some of the elements that go into such a report and how quantity surveying services can help establish a comprehensive report for you.
Why are bank prefunding reports necessary?
The whole point of a bank prefunding report is so a construction project can be independently assessed to ensure certain aspects of the project are in order – such as its construction price being at market rate. Other aspects that are assessed include background checks on the builder, confirming the insurance is current and preparing a cash forecast report.
Essentially – a bank prefunding report enables the bank to protect itself from giving out loans that have a low chance of being repaid. It is our job as quantity surveyors and independent assessors to gather the information that will indicate to the bank whether or not the loan is worth their time and money.
Gathering the information
In order to give a comprehensive and truthful report to the bank, we must assess all the relevant documentation for the construction project including the building plans and contract. We can use this information to form cost plans that will bolster the legitimacy of the report. If a bank can see a clear cost plan for the project, then it will raise their confidence in your repayment abilities and sway them further towards a loan.
Why are the contracts important?
Contracts feature elements such as construction timeframes and builders’ insurances as well as liquidated damages (which is an agreed-upon number that must be paid should the contract be broken). The construction timeframe, for example, is laid out and includes the total number of working days with leeway for inclement weather days, rest days, weekends and public holidays.
The contract will also establish details such as the cost of the deposit, who is in charge of gaining and paying for the relevant permits and extra costs that are payable by third parties that are not included in the contract’s final price – such as utilities that will be used during construction as well as telephone bills.
Quantity surveyors report
Some of the areas covered in a quantity surveyors report include the project description, estimators cost report and recommended construction cost. The project description, for example, is a basic rundown of what is involved in the project – how many storeys the property is going to be, what types of rooms it will have – as well as what materials the walls, floor and roofing will be made from. A two-storey townhouse may use brick veneer for the external walls on the ground level but weatherboard for the first floor. These sort of details all come together to help us establish a more comprehensive prefunding report.
Analysing the construction plan
When it comes to construction costs, there are different averages for the varying types of construction projects depending on the construction area. New builds in metropolitan Melbourne, for example, could be anywhere between $2,200m2 to $3,800m2 – whereas the average in suburban Melbourne could range from $1,400m2 to $2,100m2. This difference in cost is due to several various reasons such as tradespeople being able to access the site easier and a simpler overall build cost.
We review the floor plan and measure it to determine the cost per m2 to determine its accuracy. Furthermore, we take into account the forecasted construction cost prepared by the builder and estimator to judge whether or not it is a reasonably accepted amount for the type of project and more importantly, if the estimated costs are viable enough to complete the actual project.
Do you require quantity surveying services?
Section 94 is well-versed with crafting in-depth and accurate bank prefunding reports to ensure you have access to the loan you require for your next construction project as well as simultaneously assuring the bank that the loan is worth it. With years of experience under our belts and the ability to offer our quantity surveying services to anyone in Australia, you will know you are in safe hands with Section 94.
If you would like to contact us to chat about our services, then please do not hesitate to call 0413 953 869 or email us at info@section94.com.au.