Construction Funding Draw AI

The Full Picture

Most commercial and residential construction is financed with a construction loan that funds in installments, called draws, as work progresses. Each draw requires a package: the contractor's pay application, supporting invoices, conditional and unconditional lien waivers, change orders, and often a third-party inspection confirming work in place. The OCC's Comptroller's Handbook on commercial real estate lending describes disbursement controls like these as a central defense against funding work that was never done.

Assembling and reviewing a draw is document-heavy and repetitive. AI reads the pay application, typically in AIA G702/G703 format, extracts the line items, and reconciles them against the approved budget and schedule of values. It checks math, compares percent complete with inspection reports, verifies that lien waivers exist and match the amounts paid in the prior draw, and flags retainage calculations that don't match the contract.

In practice, a lender's construction administration team receives a monthly draw with dozens of attachments. Instead of manually ticking each line, reviewers get a summary: lines billed ahead of inspected progress, a missing waiver from a major subcontractor, a change order billed before it was approved, and contingency usage compared with percent complete. The human reviewer decides what to fund, hold, or query.

Draws connect back to preconstruction through the budget. The loan budget is built from the GMP or contract sum and the schedule of values developed in precon. When that budget has weak line definitions, thin contingency, or front-loaded values, every draw becomes harder to verify and disputes arise over what was actually earned.

Good draw AI shortens approval cycles while keeping controls, with every flag traced to a document. Bad implementations auto-approve based on extracted numbers without checking waivers or inspections, which removes the very controls draws exist to enforce.