Drawdown certification is the monthly mechanism by which a development facility releases money. The borrower applies, the monitoring surveyor assesses, and the lender advances against a certificate rather than against the application.
The distinction between those two documents is where the protection sits. An application is a request. A certificate is an independent statement of what has been earned.
What is being certified
Value of work properly executed on site, assessed by inspection and measurement rather than by accepting the contractor's valuation. Materials on site, provided they are properly stored and protected. By contrast, materials off site only where the contract permits it and the vesting and insurance arrangements are in place.
Alongside the construction cost sit the borrower's other development costs: professional fees, statutory payments, insurances and any other item the facility permits. Each is certified against evidence of the liability having been properly incurred.
Retention is applied, and any contra charges or deductions the contract provides for are taken into account. The output is a single figure the lender can advance without further checking.
Why applications and certificates differ
A contractor's application is prepared by a party with an interest in the answer, usually against a tight deadline, often before the month is finished. Some over statement is normal rather than dishonest.
Common differences include work valued at a stage of completion slightly ahead of reality, materials claimed that are not yet on site or not yet protected, variations claimed that have not been instructed, and preliminaries claimed on a time basis that does not match actual progress.
Each of those is individually small. Over a long project, uncorrected, they combine into a facility that has advanced more money than the building is worth, which is the position every lender is trying to avoid.
Materials off site and the vesting question
Payment for materials not yet delivered is the most exposed item in any certificate. The lender is advancing money against goods sitting in somebody else's yard.
Protection requires the contract to permit it, a vesting certificate transferring title, the goods to be clearly marked and separately stored, insurance in place, and usually a bond. Where any of those is missing, the exposure is real and the lender may be unsecured if the supplier fails.
The correct answer where the conditions are not met is to decline the item, however inconvenient. That is precisely the situation the independent role exists for.
Keeping the facility in step
A useful certificate does not only say what has been earned this month. It says whether the cumulative amount drawn remains proportionate to the work completed, and whether the money left is enough to finish.
Those are different questions. A facility can be perfectly in step on a monthly basis and still be heading for a shortfall because the forecast outturn has grown. Reporting only the monthly figure hides that.
This is why cost to complete belongs in every certificate cycle rather than in an occasional review. The related discussion sits in what a development monitoring surveyor does.
Where problems first show
An application that grows while visible progress does not. A sudden increase in materials on site late in the programme. Preliminaries continuing at full rate while the site is quiet. Variations appearing in the application before any instruction exists.
None of these prove a problem on their own and all of them are worth a question. The value of monthly attendance is that the pattern is visible; a quarterly review would see the same figures without the trend.
Where the underlying issue is that quantities or scope were never properly established, the pattern described in quantity assumption risk tends to follow.
Conditions and the last certificates
Facilities usually attach conditions to particular releases: a section agreement completed, a warranty executed, a pre commencement condition discharged, a letting achieved. Tracking those is part of the certification cycle and they are easy to lose sight of.
At the end of the job the final certificates carry their own questions. Practical completion, the release of the first half of retention, the making good of defects and the release of the remainder each have to be evidenced rather than assumed.
Getting the last certificate right matters disproportionately, because after it the lender has very little remaining leverage. Our scope on this is set out under development monitoring surveying.
What this means for you
If you are a lender, the certificate should tell you three things: what may be released this month, what remains in the facility, and whether that remainder still completes the building. A certificate carrying only the first is doing a third of the job.
If you are a borrower, submit applications that can be certified. Claiming work that is not there costs a month of cash flow and it costs credibility, which is worth more over the life of a facility than any single valuation. The lender side position is set out under what we do for the lender side.
Want drawdowns certified independently?
Tell us the facility structure and where the scheme has reached. We will confirm scope and the side we act for before starting.