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Partner Engineering and Science, Inc.
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You are here: Home » Services » Construction Risk Management » Funds Control/Funds Disbursement

Funds Control / Funds Disbursement

Funds Control can be an essential part of ensuring a construction project is completed on time and on budget. Partner’s team of construction professionals is well-versed in all aspects of the construction process and is able to fully administer the Funds Control and Disbursements Program associated with keeping a construction project on track.

What's Involved

What does a Funds Control Program Entail?

Funds Control and Disbursement encompasses all of the activities necessary to manage the pay application and disbursement process of a construction project.

From a construction risk management standpoint, sound accounting and business practice dictates not only keeping funds for different projects separated, but also examining the payment requests within each project very carefully. Appropriate invoice support and documentation must be submitted with the draw requests in order to verify that the requests are, in fact, valid and appropriate.

It is important to review the progress of the project to ensure that it is on track before any payments are made. Construction Progress Monitoring, which determines the percentage completion by line item, is usually done in conjunction with the Funds Control process.

The documentation that is inherent in a Funds Control and Disbursement program can significantly increase transparency to bank regulators, particularly during an audit.

The third-party risk management firm’s role should include:

  • Review of the pay application request
  • Collection and review of supporting documentation
  • Review of the percentage of the work completed
  • Tracking change orders
  • Lien waiver collection
  • Distribution of draw proceeds upon approval – single payee checks are made directly to the subcontractors (sent via the GC for distribution purposes) to make sure the money gets to the right people in a timely manner.

Frequently Asked Questions

Construction Risk Management, which includes Funds Control and Disbursement, is a government-approved alternative to a payment and performance bond. It is a proactive tool that can identify problems as they occur, or even before, and allow for early course correction. It is also far less expensive than a bond (usually about ½ the cost). On the contrary, a performance bond can only be called upon in the case of an actual default, which is the last place anyone wants to be.

Funds control is crucial in construction projects to ensure that financial resources are managed effectively, payments are made to contractors and suppliers promptly, and project costs are tracked to prevent cost overruns.

Reduced Risk: Mitigates the risk of liens from unpaid subcontractors or suppliers.
Ensures Proper Use of Funds: Guarantees funds are used for the intended project purposes.
Transparency and Accountability: Provides a clear audit trail and accountability for project finances.

Contractor invoices

Change orders (if applicable)

Lien waivers from subcontractors and suppliers

Proof of insurance for workers and the project

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