Risk Assessment

A thorough Initial Project Review (IPR) should be the starting point for any construction loan and CRM will review a project even if the lender has monitoring procedures that do not utilize that portion of our services.

The IPR is designed to assess the projects’ constructability based on the size, scope and complexity through the review and evaluation of the contract documents. The completeness of the plans, contractor budget and contract are only part of the equation to evaluate a projects success.  For a complete list of items reviewed or to discuss the process, please contact us here.

A Pre-closing inspection details the job site conditions prior to loan closing. This is important if the lender needs to verify work has not commenced prior to their involvement. It also documents the as-is condition of buildings set to undergo renovations.

The as-complete recertification is a typical SBA requirement verifying that the construction was completed in accordance with the appraisal. The as-complete recertification will note any major deviances from the construction plans that were reviewed for the basis of appraisal.

A Property Condition Assessment (PCA) is performed prior to a real estate transaction and is designed to address physical condition of a property and identify deferred maintenance. The PCA is performed in accordance with ASTM E2018-15 and includes a review of plans, interview with existing property owner or property manager, review of outstanding work bids, questionnaire, and a site walkthrough.

The prepared report addresses any physical deficiencies or deferred maintenance noted in the building envelope, MEP, Life Safety, Interior elements and site improvements at the time of the site visit. These issues are categorized based on severity into either “Immediate Needs” or “Short Term Costs”. A Replacement Reserve Table is also included in the scope of a PCA. The Replacement Reserve will typically estimate the building’s capital replacement schedule over the designated evaluation period.

Determining if a partially completed construction project is a work out prospect or a REO prospect while maintaining project viability requires timely, accurate information concerning the current, real condition of the property. If the project is a REO what is the best plan? Market as is: hold, thus requiring proper moth balling; or complete the project?

Construction Resource Management, LLC can then provide completion services through Project Management of the project with the existing or new team, completion after foreclosure or management of mothballing of an asset held to ensure that the collateral value of the project is not adversely affected.

Construction Resource Management, LLC performs evaluation services that allows the Lender to make informed decisions based on current market conditions.

• Site Visit – to determine the actual condition and status of the project
• Documentation of all existing conditions
• Existing General Contractor Review
• Review of original budget – to determine variance of actual cost
• Review existing contracts and agreements
• Determine if feasible to use contracted subcontractors
• Review existing loan monitoring reports and construction risk assessment report
• Review contractor payment requisitions and breakdowns
• Review approved and pending change orders
• Review mechanic liens
• Determine if payments were funded for materials stored offsite
• Determine if jurisdictional inspection is current
• Determine the impact of a revised construction schedule
• Review performance and payments bonds for adherence to obligations
• Develop a cost to complete budge and completion plan