INSPECTION, HIRING AND REPORTING CONSIDERATIONS

Awareness of the day-to-day construction progress will be important when reviewing and approving invoices. Your construction lender will also hire a construction inspector, at the project’s expense, who will inspect the property at least monthly and confirm that construction invoices match the completed work.

Throughout construction local building officials will conduct inspections to confirm that different elements of your project are satisfying building code requirements. You will need approval from local building officials at certain milestones before moving on to other phases of your project. Other partners also may require inspections at regular intervals, which could impact a project’s ability to proceed to a new phase. There may be instances where communities have not set or defined building codes. When this is the case, you should look to the standards defined by those closest to the community.

Confirming reporting requirements are met during the construction period is the responsibility of the general contractor (or developer if you are also operating as project GC). The GC will often be supported by a contract administrator who provides labor standards advice, ensures that contract language effectively represents the project’s legal requirements, and monitors compliance throughout the project by reviewing payroll reports and conducting interviews with contractors and construction workers. When a project receives public funding, the contract administrator will generally be a public employee. Additionally, the U.S. Department of Labor has independent authority to conduct investigations to confirm labor practices comply with federal standards.

Any hiring requirements should be incorporated into subcontractor agreements and made clear in the initial bid package. Reporting processes should be established upfront and documented in the contract to ensure the GC and contract administrator have sufficient information about hiring and labor practices throughout the project. Davis-Bacon and Related Acts (DBRA) refers to federal regulations that require certain labor standards (i.e., Davis-Bacon standards) to federally assisted construction projects. Specifically, Davis-Bacon requires all contractors and subcontractors to pay employees the local “prevailing wages” at a minimum. Contractors and subcontractors are required to submit payroll records weekly to certify their compliance with this standard and post the applicable Davis-Bacon wage rate prominently on the job site.