Change orders are typically handled at the site level between the owner and the contractor. Your clients should include any change-order documents pertaining to the project with the draw-request submission. This will keep the inspector apprised of any changes to the original scope of work and help make sure that the change order is in fact completed.

Inspectors should craft a complete written report that documents the observations and recommendations from each site visit. The report should include all pertinent site information, such as the lender, borrower, site address, etc.; inspection date and time; results of the inspection while onsite; and photographs documenting the findings. In the event of a dispute, these third-party inspection reports could be invaluable.

When the lender takes a property as collateral for a project to move forward, it presumes that it may have to take that property as repayment on the debt. As such, it is essential that the inspection company keep the lender apprised of actual levels of completion so the loan doesn't become upside-down.

When your client submits the final pay application and the lender requests the final inspection, the inspector must spend ample time on the site. The resulting report and photos should document completion of all budgeted items or reflect the level of completion of any items that are not completed accurately. It also should clearly document any discrepancies with photos. Once the project is confirmed to be 100-percent complete, a certificate of occupancy is issued.

Overall benefits

An inspection company's thoroughness and competence allows it to provide an assessment of the job at hand as well as an overall perspective of the entire project. Inspection companies and their inspectors should have no personal or financial interest in the project. They must demonstrate honesty, integrity and a sense of fairness.

Third-party inspections also can be more cost-effective for clients and lenders in the long run. Using a qualified, third-party inspection company throughout the construction process offers peace of mind for the owner and the lender.

Diana Clark is vice president and chief financial officer for Construction Inspection Specialists, an American Indian-owned risk-management company offering a full range of inspection services nationwide for residential and commercial project lenders. Clark has more than 20 years' experience in the construction field with 12 years dedicated to progress-inspection and cost-analysis services. She has a master's degree in business administration and has been published in strategic-management publications. Contact (707) 838-1679 or diana@cisinspects.com or visit www.cisinspects.com.

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