How Are Progress Inspections Conducted? Progress inspections are the backbone of responsible construction financing. They verify that work billed in a draw request matches what’s actually been completed on site. Done well, they protect all parties — builders, lenders, developers, and individuals — by aligning funding with real progress, minimizing risk, and keeping projects on schedule. The team at Elite Property Evaluations knows firsthand how important these inspections are and how to make them beneficial for our clients. This guide explains why progress inspections matter, who performs them, and how the process works step by step. The Role of Inspections in Construction Projects Progress inspections ensure transparency and accountability from groundbreaking to closeout. Here’s why they’re essential. Align Funding With Completed Work Lenders release funds based on verified milestones. Inspections confirm that the work claimed — like foundation complete or rough-in installed — has been done to a reasonable standard, so money follows progress, not promises. Control Risk & Prevent Overruns Regular site checks help spot scope creep, materials substitutions, or delays before they become budget problems. Early detection gives project teams time to adjust schedules, reallocate labor, or update procurement. Improve Cash Flow for Builders Predictable, verified draw cycles help builders plan payroll, subcontractor payments, and material orders. When inspections are timely and thorough, funding flows smoothly and disputes are rare. Build Trust Among Stakeholders Objective, third-party verification reduces tension between lenders and builders. Private clients gain confidence that their investment is safeguarded by an independent review. Document the Project for Compliance Professional reports provide a reliable record for loan files, audits, and end-of-project reconciliations. Clear documentation also helps resolve discrepancies quickly. A practical example: A mid-rise multifamily project splits the loan into eight draws aligned with milestones (sitework, foundation, framing, MEP rough-in, etc.). At each milestone, a progress inspection verifies the percentage complete by trade and system. When inspectors flag a delay in window delivery, the developer adjusts the schedule, the lender staggers disbursements accordingly, and the builder redirects crews to interior work. Cash flow stays stable, and the project avoids a stop-and-go funding cycle. Who Conducts the Inspections? Progress inspections are typically carried out by independent, third-party professionals engaged by the lender or owner. Depending on project size and complexity, you’ll see several roles: Third-party inspection firms: Specialized companies like Elite Property Evaluations focus on draw inspections, budget verification, and progress validation. We bring standardized methodologies, fast turnaround, and state-wide coverage for Texas and Oklahoma. Construction consultants: For large or complex projects, lenders or developers may hire owner’s reps, quantity surveyors, or cost consultants to oversee budget adherence and validate progress against schedules of values. Licensed architects or engineers: On technical scopes (structural, MEP-heavy builds), an A/E may verify code-related milestones or certify completion percentages for critical systems. Owner’s representative: Private clients and developers often retain an owner’s rep to coordinate inspections, review pay applications, and ensure alignment between the contract, schedule of values, and field conditions. Internal lender inspectors: Some lenders use staff inspectors for smaller projects or local portfolios. Many still outsource to achieve independence and speed during peak periods. What Makes a Good Inspector? Field experience across trades, so they can spot quality issues and sequencing risks. Financial literacy to tie the field progress to the draw schedule and budget. Clear, unbiased reporting with photos, quantity verification, and percentage complete by line item. Strong communication to resolve questions quickly and keep funding on track. Key Steps in the Inspection Process While each lender and project is unique, a well-run progress inspection follows a consistent workflow. Below is a step-by-step view of how Elite Property Evaluations approaches it. 1. Request & Document Intake Trigger: A builder or developer submits a draw request to the lender, supported by a pay application, schedule of values (SOV), subcontractor invoices, change orders, lien waivers, and any permits or test results relevant to the draw. Intake review: The inspection team screens the package for completeness and flags missing items early. This prevents wasted trips and speeds funding. Pro tip: Align your SOV line items with realistic, inspectable milestones (e.g., “Roofing—materials on site” separate from “Roofing—installed”) to avoid disputes about partial completion. For more information on the paperwork you need to submit a draw request, check out Essential Documents for Processing a Draw Request. 2. Scope & Risk Review Baseline docs: Inspectors review the contract, budget, updated construction schedule, prior draw reports, and any approved change orders. Risk focus: They note long-lead materials, critical path activities, and areas where prior inspections flagged issues (e.g., waterproofing details, firestopping, exterior envelope). Result: A targeted field plan that prioritizes high-impact work and potential bottlenecks. 3. Scheduling the Site Visit Coordination: The inspector contacts the site superintendent to schedule access during active work hours. If specialty verification is needed (e.g., pressure tests, concrete cylinder breaks), the visit is timed accordingly. Safety and access: Confirm PPE requirements, gate access, escorts, and areas where work is sensitive or restricted. Fast scheduling matters. Many lenders target 24–72 hours from request to site visit to keep cash flowing. 4. On-Site Verification The heart of the inspection is a systematic walk-through to validate claimed work: Visual verification: Inspectors compare the draw request to field conditions, line item by line item — foundation, framing, MEP rough-in, roofing, windows, interior finishes, sitework. Quantity checks: Where applicable, they measure or estimate quantities (linear feet of framing, square footage of drywall hung, fixture counts) to support percentage complete. Photo documentation: Time-stamped photos capture progress and any variances. Inspectors may include drone images for sitework and facades on larger sites. Quality observations: While not a code inspection, inspectors note obvious quality or sequencing issues that could impact completion or rework risk (e.g., missing flashing, out-of-tolerance slab, unprotected materials). Materials on site: If the contract allows stored-materials billing, inspectors verify quantity, condition, and storage protection (e.g., windows crated, HVAC units wrapped off the ground). Outcome: A preliminary assessment of what portion of each line item is complete and whether any claimed amounts are overstated. 5. Alignment With Budget & Schedule of Values Back in the office, the inspector ties field observations to the SOV and budget: Percentage complete by line item: Each line item receives a completion percentage, supported by notes and photos. Previous draws reconciled: Inspectors ensure totals don’t exceed 100% and that cumulative billing aligns with cumulative progress. Change orders integrated: Approved change orders are added to the baseline, and progress against those changes is measured. This step prevents common issues like double-billing or front-loading. 6. Variance Analysis & Issue Flagging Inspectors identify gaps between the request and observed conditions: Overbilling: If the request shows 60% drywall complete but site conditions show 40%, the report notes the variance and the recommended payable percentage. Missing documentation: Uncollected lien waivers, incomplete CO approvals, or absent test results are flagged as funding holds until resolved. Schedule risks: Material delays, weather impacts, or manpower shortages are noted with potential effects on the next draw. Transparent variance notes help lenders calibrate disbursements and help builders adjust plans before small issues become funding problems. 7. Report Preparation & Delivery A professional progress report includes: Executive summary: High-level status and funding recommendation. Detailed line-item assessment: Requested vs. verified percentage complete, with commentary. Photo log: Organized by trade or location for clarity. Exceptions and conditions: Items that must be resolved for full funding (e.g., proof of stored materials insurance). Next steps: Suggestions for documentation or sequencing to support the next draw. Turnaround times typically range from 24 to 72 hours after the site visit, depending on project size. 8) Lender Review & Disbursement Lender decision: The lender reviews the report, validates internal requirements, and approves the recommended funding amount. Communication loop: Any questions are routed back through the inspector or borrower. Clear, quick responses keep the process moving. Disbursement: Funds are released according to policy, sometimes with holdbacks on disputed line items until resolved. 9. Follow-Up & Continuous Monitoring Rolling verification: On the next draw, prior exceptions are checked for closure. Trend tracking: Inspectors look for patterns—consistent overbilling, recurring punch issues, or trades falling behind—to inform proactive risk management. Closeout alignment: As the project nears completion, inspectors verify final items, retainage conditions, and documentation like warranties and as-builts. Elite Property’s Accurate Inspections Keep Projects Moving Progress inspections turn complex, moving projects into a clear, fundable sequence. By verifying work against the budget and schedule of values, they align everyone’s expectations and keep cash flowing. Whether you’re building, financing, or owning, partnering with a seasoned inspection firm like Elite Property Evaluations helps you avoid surprises, resolve issues fast, and deliver projects on time and on budget. Ready to streamline your draws? Contact Elite Property Evaluations to schedule your next progress inspection or to standardize your draw documentation across projects.