Developer Draw Review
Developer Draw Review
When reviewing a developer’s draw, it’s important to ensure that all costs are properly accounted for, especially when there are multiple types of costs involved, such as land, contractor fees, and soft costs. Here’s a breakdown of the key steps involved in conducting a Developer Draw Review, ensuring that all financials align with the project’s progress and the initial budget.
Invoice Verification
The first step in any Developer Draw Review is to verify that the invoices match what’s included in the invoice list.
Verify Amounts: Ensure that the amounts listed in the invoice correspond accurately to those on the invoice list.
Project Relevance: Confirm that each invoice is related to the actual project, and that the costs are legitimate and directly tied to project work.
Review the Project Cost Report / Developer Budget Summary
The next step is to review the Project Cost Report or Developer Budget Summary to ensure that cost allocations are correct and well-documented.
Line-Item Adjustments: Look for any changes to the line-item costs. If adjustments are made, these should be documented in a Budget Adjustment Summary, detailing where funds originated from and where they’ve been moved.
Major Categories Summary: Identify significant line-item adjustments across the major categories like land, hard, and soft costs.
Contingency Allocations: Make note of any contingency allocations and their use. This will help ensure the budget remains intact for unexpected costs.
Billing Percentage Review: Examine the percentage of the project billed to date to see if it aligns with the project’s current status. Verify whether there are sufficient funds for remaining project costs. For example, ensure that there’s enough to cover architectural fees for ongoing construction administration.
Developer Contingency Considerations
A contingency is built into a development budget to cover unexpected costs. Typically, there are two types of contingency allocations: hard cost contingency and soft cost contingency.
Hard Cost Contingency: This contingency is usually set between 3-5% of the total hard cost budget, depending on the complexity of the project. The hard cost contingency should cover risks related to construction, materials, labor, and any unanticipated physical changes required.
Allocation Review: Review current hard cost contingency allocations, noting any risks or changes in the allocation and whether they align with project needs.
Soft Cost Contingency: This contingency addresses unexpected soft costs, such as design fees, permits, construction loan interest, and insurance. It’s essential to monitor soft costs for potential overruns.
Allocation Review: Just like hard cost contingencies, soft cost contingency allocations should be reviewed and discussed. Ensure that any risks related to overages in areas like design fees or permit costs are clearly noted.
Conclusion
The Developer Draw Review process is a critical part of maintaining financial transparency and control over construction projects. By verifying invoices, reviewing project costs, assessing contingency balances, and identifying potential cost risks, you can verify if the project and budget are on track. Through thorough reporting and monitoring, any discrepancies or potential budget overruns can be flagged early, allowing for timely adjustments or planning for additional capital.
For developers and project stakeholders, having clear, accurate financial documentation and timely reviews is key to allowing for timely payment disbursements, minimizing financial surprises, and overall health.
By the Numbers:
1500 +
Projects
25 +
Years of Service
17 B
In Developments in 2023
50
States Served
Construction Services Leadership
Michael Raybon
Managing Principal
Michael Raybon is the Managing Principal of Pond, Robinson & Associates and brings 30 years of experience in the evaluation of existing facilities. Mr. Raybon has been the project engineer on thousands of projects involving all types of construction material forensic investigations. Over the last 15 years, Mr. Raybon has been an integral part of the operations and management of Pond, Robinson & Associates. In addition to previously conducting and reviewing property condition assessments and reports, Mr. Raybon has extensive technical expertise in evaluating the following construction materials: concrete, steel, masonry, stucco, roofing and waterproofing materials and membranes, sealants, coatings, and pavements. Mr. Raybon has been a registered Professional Engineer for 22 years.
Mr. Raybon has significant experience in both business management and client management. In his ownership role at Pond, Robinson & Associates, LP he interacts with real estate investors and corporate clients helping to coordinate evaluating the physical risk prior to real estate transactions or associated with operational issues.
Mr. Raybon has cultivated an understanding of site development, building construction administration, specifications, scheduling, and project management issues nationwide. Additionally, he has directed and managed consultants, contractors, and vendors to maintain schedules and budgets. In his role, Mr. Raybon has coordinated the engineering assessment of major projects located in many submarkets throughout the nation and reviewed the conclusions of specialty sub consultants for his clients on commercial office, industrial, retail, and multi-family properties.
Education
B.S., Materials Science and Engineering, University of Florida 1990
Registrations
Professional Engineer, Florida, 1998
Professional Engineer, Texas, 2009
Rebecca Fischer
Director of Construction Services
Rebecca L. Fischer is the Director of Construction Services at Pond, Robinson & Associates and brings over 25 years of facilities and construction consulting experience to the firm. Ms. Fischer has been involved in the design and construction of several new facilities, development and construction monitoring of large projects, and the assessment of existing buildings nationwide. She has over 21years of experience at PR&A working with our Investment and Asset Management clients on high profile development projects including high-profile resorts, office and residential complexes, and multi-family projects with total project costs of up to $935M. Through her experience with development and construction projects she has cultivated an understanding of site development, building construction administration, specifications, scheduling, quality assurance, cost control, and project management issues. She is a registered LEED® AP BD+C professional which has helped clients achieve their sustainability goals within their portfolio.
As Director of Construction Services, Ms. Fischer is tasked with client relations, coordination of services, mentorship and management of personnel, continuing education, and the quality maintenance of the construction related services and reporting. She is also actively involved in the construction administration and monitoring of several projects. Her years of experience allow here to add value for her clients related to budget, scheduling, quality control, and assessment of building components and design including the building envelope and accessibility.
Education
Bachelor of Science, Civil Engineering, Texas A&M University, 1997
Master of Engineering, Civil Engineering, Texas A&M University, 1999
Registrations
Professional Structural Engineer, Texas since 2003
LEED® AP BD+C since 2012
David Jones
Director of Real Estate Services
David Jones brings over ten years of well-rounded experience in design, construction, facility assessments and project management to Pond, Robinson & Associates. His role is to serve as bridge for clients, helping them understand and develop the right technical or project management approach to each investment or exchange. Mr. Jones has provided services to institutional real estate investors and lenders and many developers and contractors.
Mr. Jones has experience with property condition evaluations and construction observation and compliance reviews related to all asset types, including commercial office, industrial, retail, and multi-family improvements. His consulting experience includes comprehensive reviews of design documents for planned projects, performing evaluations of existing properties, and acting as the owner’s representative during the construction of properties of various sizes and complexities.
Education
Bachelor of Science, Construction Management, University of Houston, Houston, Texas
Registrations
Associate Constructor, American Institute of Constructors, License 10711
LEED® Green Associate™, Green Business Certification Inc. Credential ID 11131858
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Browse Our Website to Understand How Our Expertise Translates into Successful Outcomes for Our Clients.
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