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Project & Budget Review

A Project and Budget Review (PBR) is a limited scope report, typically conducted prior to the closing of a construction loan, that reviews a subset of items that are reviewed in a Document and Cost Review. The items reviewed can include the Budget, Schedule, Drawings and Specifications, Construction Contract, and any other document(s) related to budget and scope. The PBR can be considered a streamlined review that looks for alignment of the three pillars of any construction project: the budget, the scope, and the schedule. The PBR is best used for small projects (ex: under $1 million), small scopes (ex: like a tenant fit-out), projects with limited documentation, and for other scenarios listed below.

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What's Involved

 

A Project and Budget Review is warranted when:
  • A budget has been submitted by the Developer or General Contractor which requires a detailed analysis of each line item cost to confirm the values submitted.
  • The original budget has been modified, requiring a detailed analysis of each line item cost to confirm the values submitted. This review compares the new costs with the original budget.
  • A new Lender or Equity Investor requires confirmation of the budget prior to entering into a financial relationship with the Borrower.
  • The budget used for the project was not originally prepared by the Developer or General Contractor.
  • A document and cost review is not required, but the client still desires some due diligence.
A Project and Budget Review provides a review of:
  • The original or modified budget prepared by the Developer or General Contractor.
  • The original or modified budget prepared by an entity not associated with the Developer or General Contractor.
  • Any approved or potential changes to the original budget created by scope changes, design modifications, value engineering, or force majeure.
  • The construction schedule and its impact on the budget, if any.
Partner’s deliverable will include:
  • A report that identifies all aspects of the review
  • Analysis and review of the original construction budget as it relates to any modifications or changes in the scope or design.
  • An opinion on the findings from this review and recommendations for the Client’s consideration.

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Frequently Asked Questions

Partner conducts a Project and Budget Review as a third party to a construction project and analyzes each line item of a proposed budget to confirm the values submitted are reasonable. We can also look at any approved or potential changes to a budget created by scope changes, design modifications, value engineering, or force majeure.

It ensures that the developer or General contractor submitting the budget are charging realistic rates considering the construction schedule and that the lender or investor are on the same financial page.

Unexplained cost overruns, lack of documentation for expenses, and deviations from the initial budget without proper approval.

Scope creep (adding features or functionalities beyond the initial plan).
Unforeseen circumstances (e.g., material price hikes, delays due to external factors).
Inaccurate initial estimates during project planning.

Project and budget reviews can be improved by establishing clear objectives and criteria for evaluation, fostering open communication among stakeholders, using appropriate tools and techniques for analysis, and continuously learning from past experiences to refine future reviews.

Key metrics include budget variance (the difference between actual and planned expenses), schedule performance (progress against the project timeline), cost performance index (CPI), schedule performance index (SPI), and earned value (the value of work completed compared to the budgeted cost).

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