Draw Inspection Report Standard: What to Require

Year-end is when a construction file gets read by someone who was not there: internal audit, loan review, a participant bank or an examiner. At each draw, the inspection report is often the only independent record of what the lender's money bought. If one inspector writes three lines and another sends forty photos with no captions, the file answers different questions on different loans.

A report standard fixes that. It is the short list your policy points to, and every report has to meet it, whoever did the inspection. This guide sets out what the standard should require and how to check a year's files against it. For the plain list of what a typical report includes, see What is included in a draw inspection report?

The regulators describe the report by what it has to support. The FDIC's construction and land development examination procedures ask whether reports are detailed enough to support disbursements, and whether disbursements are made only after management reviews written inspection reports, lien searches and title updates. The OCC's Comptroller's Handbook describes reports that state compliance with plans and specifications, support percentage-complete disbursements and say whether the project is progressing as anticipated.

For credit unions, the NCUA's examiner's guide says funds are released only after on-site inspections, documented in a written report by qualified personnel representing the credit union, that certify the requisitioned work is complete and that the remaining funds can finish the project. None of the three prescribes a form. Each asks whether the report in the file supports the money that went out.

A draw inspection report is evidence of work in place. The lender reads it beside the budget, invoices, lien waivers and its own policy, and the lender decides. A standard that asks the inspector to make the funding call blurs who is accountable for it.

Before audit or exam season, pull a sample of funded draws from each construction product and read them the way an outsider would. Your policy or internal audit sets the sample size. For each draw, ask:

• Is there a written report dated before the funds went out?
• Can every funded line be matched to a percentage and a photo?
• Were the exceptions the report raised resolved, and is the resolution in the file?
• Do reports from different inspectors answer the same questions in the same order?
• Where a draw was funded without a fresh inspection, is the reason recorded under the exceptions section of your draw inspection policy?

Gaps found in November can still be fixed in the standard for next year. Gaps an examiner finds become findings.

In RAZE, the lender sets the required questions and photos in the Ordering Engine, so its criteria travel with every order. The inspector completes them in the RAZE Mobile App, where photos carry GPS coordinates and date and time stamps and link to the draw sheet line items they support. Each inspection keeps a history of its status changes and who made them. The lender's reviewer accepts or rejects each submitted inspection, unless the institution has turned on auto-approve, a workflow setting rather than an AI decision; a rejection carries the reviewer's reason back to the inspector.

RAZE builds your standard report once with your logo, brand colors, cover fields, on-site questions and one of three draw sheet styles: line-item, percent-based stages or a custom budget in dollars. Every inspection after that comes back as a PDF in the same format, in the Ordering Engine and by API, whether a RAZE Marketplace inspector or your own inspector did the work. Page through the example report or see how RAZE runs draw inspections.