What is draw schedule?
Draw schedule is details of the payments that are to be made for the project of construction. The main requirement of the draw schedule is in those projects that require the release of funds in a time bound manner as each step of the project gets completed. This payment is made to the contractor by the company that hires it or the bank from which the loan has been sanctioned.
What is the need of the Draw Schedule?
The main aim of making a draw schedule is to ensure that no payment is made unnecessarily to the contractor for the materials that have not been used or delivered or the work that has not been completed. The draw schedule is not proposed by any owner or bank instead it is proposed by the contractor who has been assigned the work. But, bank or you can negotiate with contractor regarding the cost and the time that takes him to complete different stages of the work.
Many a time the banks have their own draw schedules designed but the appraiser of the bank will determine the most relevant draw schedule that must be adopted. You can also do the research on your side if you are to pay by cash.
The size of the project and the builder’s or bank’s wishes will decide upon the number of payments that can be scheduled for the total payment for the project. You can base the payments on the stages or percentage of the work has been completed by the contractor.