Advisory - Capital Controls
Draw Request & Pay Application Audits Across the Southeast
Every draw request is a claim on your capital before that capital is verified as earned. We read the Schedule of Values, walk the site, and certify only what has actually been installed.
What is a draw request audit and why does a developer need one? A draw request audit is a line-by-line review of a contractor's monthly pay application against the Schedule of Values, lien waivers, and physical site conditions, performed by an owner's representative before the lender or owner releases funds, so that developers pay only for work that is verifiably complete rather than for front-loaded or inflated billing.
Why draw requests are the single biggest capital leak on a job
A pay application is a self-reported invoice. The general contractor prepares it, the general contractor benefits from it being approved quickly, and the developer or lender is asked to trust it on a monthly cadence for the life of the project. That asymmetry is where capital disappears.
Front-loaded Schedules of Values, stored-materials claims for goods that were never delivered, and percent-complete figures that don't match what's standing on site are common - not because every contractor is dishonest, but because the system rewards optimistic billing and punishes nobody for it until an audit catches it.
What we audit on every AIA G702/G703 pay application
- Schedule of Values integrity Confirming line items weren't front-loaded at contract signing to accelerate early payment ahead of actual cost incurred.
- Percent-complete verification Physical site walk to confirm the percentage billed matches the percentage of work actually installed, not just scheduled.
- Stored materials claims Requiring proof of delivery, insurance, and secure on- or off-site storage before crediting materials not yet incorporated into the work.
- Lien waiver tracking Verifying conditional waivers match the current draw and unconditional waivers match the prior draw, for the GC and every tier of subcontractor.
- Retainage discipline Confirming retainage is withheld at the contracted percentage and not quietly negotiated down draw by draw.
- Lender documentation Assembling the inspection reports, waivers, and backup that construction lenders require before they will fund.
How we run the audit, step by step
1. Pre-draw document intake
We collect the pay application, updated Schedule of Values, subcontractor waivers, and material invoices before the draw deadline, not after.
2. Physical site verification
A JFD representative walks the site against the billed percentages, photographing progress and flagging any line item billed ahead of installed work.
3. Line-by-line reconciliation
We reconcile every Schedule of Values line against prior draws, current progress, and the original budget to catch drift, duplication, or re-billing.
4. Waiver and lien-position check
Every waiver is matched to the correct draw amount and correct tier before we sign off, closing the gap where lien exposure typically hides.
5. Certification or rejection
We issue a written recommendation to fund, partially fund, or reject the draw, with the specific line items and dollar amounts in dispute.
What the owner receives
You get a defensible paper trail for every dollar released, on a cadence that matches your draw schedule, not a quarterly summary that arrives after the money is gone.
- A written draw certification or rejection memo before each funding date
- A running Schedule of Values variance log across the life of the project
- Lien waiver compliance tracking by subcontractor tier
- Direct coordination with your construction lender's inspecting engineer
Where this matters most
Draw audits carry the most weight for developers and institutional capital who are not physically present on site - the out-of-state investor funding a multifamily project in Charlotte, or a lender's asset manager overseeing a portfolio across the Southeast. Distance is exactly what front-loaded billing depends on.
Answers
Frequently asked questions
How often should a draw request be audited?
Every single draw, not a sample. Front-loaded billing and stored-materials misrepresentation tend to appear early and compound, so skipping even one month's audit can let an unearned overpayment sit uncorrected for the rest of the project.
Can a draw audit delay funding to my contractor?
A disciplined audit adds a short review window before certification, but it typically prevents far longer delays caused by disputes over overpayment discovered later. Most audits are completed within a few business days of receiving the pay application.
What happens if the audit finds the contractor over-billed?
We issue a partial certification for the verified amount and a written list of the specific line items in dispute, giving the owner grounds to withhold payment on the unverified portion until it is either corrected or substantiated.
Do lenders require this kind of audit?
Construction lenders typically require an inspecting engineer's sign-off before funding, but that review is often desktop-based. A draw audit performed by an owner's representative adds physical site verification that most lender inspections don't include.
Does JFD audit draws on projects it isn't building?
Yes. Draw request audits are an advisory service performed independently of construction execution, which is why they carry weight - the reviewer has no financial stake in approving the contractor's billing.
Protect this month's draw
Get an independent set of eyes on your next pay application
Before you release another dollar against a Schedule of Values you haven't verified in person, talk to a fiduciary advisor who has.