What Goes into a Bank Prefunding Report?

November 22, 2023

A bank prefunding report is an in-depth account that a quantity surveyor engages in on behalf of homeowners. The purpose of such a report is to seek financial approval for a construction project from the bank. Today’s article will be looking at some of the elements that go into such a report and how quantity surveying services can help establish a comprehensive report for you.

Why are bank prefunding reports necessary?

The primary objective of a bank prefunding report is to conduct an impartial evaluation of a construction project, verifying various critical aspects such as the project’s construction cost aligned with market rates. In addition, it includes assessments like builder background checks, validation of current insurance, and formulation of a cash forecast report.

In essence, a bank prefunding report functions as a protective measure for the bank, mitigating the risk of disbursing loans with a low likelihood of repayment. As quantity surveyors and independent assessors, our responsibility lies in gathering and presenting pertinent information to aid the bank in determining the viability of investing their resources in the loan.

Gathering the information

To provide a thorough and accurate report to the bank, we meticulously evaluate all pertinent documentation related to the construction project, including building plans and contracts. Utilizing this information, we create detailed cost plans that fortify the credibility of the report. A transparent cost plan for the project can significantly boost the bank’s confidence in your capacity to repay the loan, thereby influencing their inclination towards granting the loan.

Why are the contracts important?

Contracts encompass various facets including construction timelines, builders’ insurance, and liquidated damages, which entail an agreed-upon sum to be paid in case of contract breach. The construction timeline delineates the total working days, accommodating contingencies for adverse weather, off-days, weekends, and public holidays.

Additionally, contracts stipulate specifics like the deposit amount, responsibilities for acquiring and funding necessary permits, and ancillary expenses payable by third parties beyond the contract’s ultimate price. These additional costs encompass utilities consumed during construction and miscellaneous expenses such as telephone bills.

Quantity surveyors report

A quantity surveyor’s report encompasses several key areas, such as the project description, estimated cost breakdown, and proposed construction expenses. The project description delineates the project’s fundamental aspects—its structure, including the number of stories and room types, and the materials employed for walls, flooring, and roofing. For instance, a two-story townhouse might utilize brick veneer for ground-level exterior walls and weatherboard for the upper floor. These specific details collectively contribute to formulating a detailed prefunding report.

Analysing the construction plan

When considering construction expenses, averages vary across different construction areas. For instance, new builds in metropolitan Melbourne may range between $2,200m2 to $3,800m2, while the average in suburban Melbourne might fall between $1,400m2 to $2,100m2. This cost discrepancy results from factors like ease of site access for tradespeople and the overall simplicity of the construction.

Our assessment involves a thorough review of the floor plan, calculating the cost per m2 to ascertain its accuracy. Additionally, we evaluate the builder and estimator’s projected construction costs, determining whether they align reasonably with the project’s type and, more significantly, if the estimated expenses are realistic enough to successfully complete the project.

Do you require quantity surveying services?

Cost Logic is well-versed with crafting in-depth and accurate bank prefunding reports to ensure you have access to the loan you require for your next construction project as well as simultaneously assuring the bank that the loan is worth it. With years of experience under our belts and the ability to offer our quantity surveying services to anyone in Australia, you will know you are in safe hands with Cost Logic.

If you would like to contact us to chat about our services, then please do not hesitate to call +61415533622 or email us at info@costlogic.com.au