Construction Loan Monitoring

Construction Loan Monitoring helps protect banks, lenders, and financial institutions from the risks inherent in construction lending. GLE’s construction loan monitoring services include plan and cost reviews, construction loan inspections, and funds control. Our multidisciplinary team of engineering, architectural and construction professionals has been effectively protecting lenders with construction loan monitoring services since 1989.

Construction loan risks fall into three categories: Overfunding work that’s not complete, funding troubled projects plagued with issues that impede the construction process, and funding for trades that don’t get paid by the General Contractor. GLE works to mitigate all three. As one of the Southeast United States’ leading construction consulting firms, GLE has performed construction consulting and construction loan monitoring for thousands of projects, with project construction costs ranging from $140,000 to over $75 million. Our clients include both public and private sector organizations, and both new construction and complex renovations. Projects include office, industrial, educational, retail, single & multi-family residential, religious, manufacturing, healthcare and laboratory construction.

Our construction loan monitoring services include initial Plan and Cost Reviews, Construction Loan Inspections and Construction Funds Control.

Plan and Cost Reviews

Plan and cost reviews help lenders evaluate and mitigate risk on their construction projects before construction begins. Our team of engineers, architects and construction professionals reviews the plans to ensure they are complete, detailed, and constructible, to minimize unforeseen costs after construction starts. We also review line item cost breakdowns of the construction budget to ensure costs are in line with current market pricing for both labor and materials. Finally, we review every line of the construction contract to ensure it adequately protects the lending institution, as the borrower is making a large number of commitments to the contractor, that are not always in the bank’s best interest, such as: whether the contractor is providing the appropriate levels of bonding and insurance, whether there are liquidated damages clauses, what the payment terms are, and whether there are off-site storage clauses that don’t agree with bank policies.

GLE’s plan and cost reviews include an examination of the 3Cs of Construction: Cost, Constructability, and Contingencies.

Cost: We evaluate requested fund amounts to ensure that these costs are appropriate for the job and proportioned correctly, to avoid front-loading and cost padding.
Constructability: We review every aspect of construction plans to ensure that they are adequately detailed, account for real-world conditions, and that they are unlikely to create unnecessary change orders and rework.
Contingencies: We review allowances for contingencies to ensure they’re in line with industry standards and appropriate for the specific conditions of the individual project.

Construction Inspections

Construction inspections protect the lender’s investment while the project is in the construction phase. They help ensure that the work is completed in a timely and workmanlike manner. Our engineers, architects and construction professionals walk the job site at regular intervals to ensure that the contractor and trades have completed the work they are invoicing for, and that the quality of the work meets industry standards, the demands of the contract and the specifications. We also review change order requests to ensure they are appropriate and the costs are reasonable for the scope of work.

Our multidisciplinary team brings deep expertise in construction techniques and materials, as well as electrical, plumbing, and HVAC systems. We inspect all of these components at each stage of the funding process to ensure that work being invoiced is in fact in place. When requested by the bank, we also inspect off-site stored materials to ensure that requests for the funding of these materials is appropriate, and that the materials are stored correctly in an insured environment.

Construction Funds Control

Construction funds control helps lenders ensure that payments to all subcontractors and material suppliers are being made in a timely manner. When asked to provide funds control services, GLE tracks Notices to Owner and subcontractor pay requests, again ensuring that they are appropriate relative to the work in place. After confirmation, GLE makes payments directly to the subcontractors and material suppliers, in return for receipts of Affidavits of Payment. This process prevents liens on the property associated with the General Contractor’s failure to pay the subcontractors or material suppliers for their work. Funds control is often accepted as an alternative for Payment and Performance Bonds, which do provide protections in the event of the contractor’s failure to perform, but only after the construction process has collapsed.

Our cloud-based inspection technology allows us to return preliminary inspection reports rapidly, so that you can fund draw requests with confidence. Our team’s current and in-depth knowledge of the construction industry allows us to accurately evaluate draw requests and the work on which they’re based.

Unparalleled Track Record

GLE’s expertise and track record in construction loan monitoring is unmatched in the industry. We’ve served more than 70 financial institutions of all sizes and types, from community credit unions to large multi-national banks, on projects from little more than a hundred thousand dollars up to tens of millions of dollars. Our multidisciplinary staff includes certified building inspectors, cost estimators, registered architects, professional engineers, licensed general contractors, and environmental professionals. Every project is headed up by senior staff with at least 20 years experience.

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