Setting Up for Success with Construction Plan and Cost Reports

10/18/2018 - Blog

What is a construction plan and cost report?

A construction plan and cost report (CPCR) is an extensive review, evaluation, and report on a construction project plan created by a project manager, often followed by monthly construction monitoring reports (CMRs). Most lenders value additional insight into the nature of complex construction projects and frequently hire third party consultants to advise prior to and during construction. The CPCR is usually requested by a lender and reviews vital documents provided by the potential borrower, including, but not limited to:

  • Professional services agreements
  • Construction contract
  • Budget
  • Plans and specifications
  • Contractor qualifications
  • Permits and approvals
  • Project/Construction schedule
  • Construction & architectural drawings

Construction plan and cost reports are conducted prior to the start of a construction project, sometimes even before closing on a loan agreement, to gauge how accurate and reasonable a project plan is. The goal of the report is to confirm the feasibility of a project plan based on a review of the technicalities and cost projections. The report provides the lender with in-depth knowledge and detail on the construction plan which the lender can then use to determine whether or not to grant the loan and move forward.

Construction Plans 1[i] Construction Plans 2[ii]

 

Why is this important?

As a lender, you want to invest in projects that will run smoothly, be completed on time and on or under budget, and generate a return on your investment. The best way to accomplish this is to invest wisely in the most promising projects with dependable, reputable, and knowledgeable developers to reduce as much risk as possible.

CPCRs assist lenders in avoiding risks such as over-lending, lending on risky projects, and investing in projects with unrealistic costs and construction timelines. This process can help inform lenders on whether the project is a sound investment, thus avoiding wasteful or even disastrous projects.

 

Where to start?

EBI Consulting’s highly qualified Construction Loan Monitoring (CLM) practice is dedicated to this process. An EBI Project Manager well versed in the construction industry will work as a trusted liaison to advise clients on their best options. Our CLM team works to provide a detailed CPCR and make educated recommendations based on the information provided so the bank or lender can make the most educated and informed decision possible. A detailed and well conducted CPCR helps diminish risk by determining whether the project plans are as efficient and cost effective as possible.

If a project appears to be a sound investment, EBI’s CLM team can then conduct monthly construction monitoring reports (CMRs) to track the project progression working towards the continued goal of a successful project completion and return on investment.

 


Sources

[i]  https://tech-labs.com/career-pathways/architecture-construction

[ii]  https://www.collegechoice.net/rankings/best-online-construction-management-degrees/

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