This service is most commonly provided to financial institutions who are either funding or forward funding (prior to eventual purchase) new developments. The precise nature and importance of the risks to which funders are exposed varies depending on their interest (for example, whether they are simply providing development finance, or will purchase the development as an investment on completion). But as with all construction projects, these risks are inherently related to a combination of three factors; quality, cost and time.
The function of the monitoring surveyor is to identify any shortcomings or problems, whether real or potential, to bring these to the attention of the funder and to ensure (as far as possible under the terms of the funding agreement) that appropriate changes or remedial actions are instigated by the developer and the development team. The service can best be described in three stages:
STAGE 1: Pre-construction project audit
This involves, inter alia, reviewing all of the design information, cost plans, programmes, development team structure and composition, contracts, warranties and statutory requirements and preparing an audit report for the client identifying any matters of concern with recommendations for appropriate changes to be made.
STAGE 2: Construction phase monitoring
Making periodic visits to the development site during the construction phase to inspect the works in progress. Typically, these visits and inspections will be made on a monthly basis but can be more frequent depending on the nature of the project and the prevailing circumstances. Visits may also coincide with attendance at monthly site meetings to represent the client’s interests.
Directly following each visit, preparing brief monitoring reports for the client covering all salient aspects, highlighting areas of concern and any recommendations for remedial actions to be taken. This stage of the service may also include approving monthly or periodic payment recommendations or draw-down requests from the developer/contractor.
STAGE 3: Practical Completion and defects liability
Approving the certification of Practical Completion of the construction works and/or making representations under the terms of the funding agreement. (Note: for an institutional investor such as a pension fund of life company, Practical Completion may trigger their final purchase of the development).
Monitoring the making good of any defects post-Practical Completion and at the end of the defects liability period.