Funds Administration and Disbursement, also known as Funds Control, is a process managed by 3rd party firms and encompasses all of the activities necessary to manage the pay application and disbursement process of a construction project.
The Funds Administration and Disbursement process includes; collecting the back-up invoice support from the subcontractors and suppliers, matching them up to the line item percentage completion of the construction progress monitoring site visit, auditing the pay application request, and cutting individual payee checks directly to the subs and suppliers. The process ensures that the lender’s loan proceeds are going into the project intended, and not being diverted to others that the lender may have nothing to do with. It is important to note that, since 80-85% of construction contract defaults are not performance related, but instead are payment related, Funds Administration and Disbursements eliminates the ability of the contractor to comingle funds between multiple projects that they may be working on.
