Key Takeaways
- Draw schedules: milestone-based, back-loaded, inspection-verified.
- Standard 5-draw schedule covers major construction phases.
- Verify every draw with site visit and lien waivers.
- Retainage 5-10% provides punch list leverage.
Draw schedules align payments with completion, protecting investor capital.
Draw Schedule Design
Standard 5-draw: Demo 15%, Framing 20%, Rough MEP/Drywall 25%, Finishes 25%, Final 15%. Each draw lags completion. Never pay ahead.
| Draw | Milestone | % | Cumulative |
|---|---|---|---|
| 1 | Demo complete | 15% | 15% |
| 2 | Framing complete | 20% | 35% |
| 3 | MEP/Drywall | 25% | 60% |
| 4 | Finishes | 25% | 85% |
| 5 | Final/CO | 15% | 100% |
Standard 5-draw schedule
Draw Verification
Site visit, inspection confirmation, lien waiver collection, budget reconciliation before every payment.
Guided Practice: Managing Draws: $90K Renovation
Five draws with 10% retainage.
- 1Each draw: verify milestone, withhold 10%, collect previous waivers.
- 2Final: confirm CO + punch list, release all retainage.
- 3Total paid: $90,000 in five verified installments.
Key Takeaways
- ✓Draw schedules: milestone-based, back-loaded, inspection-verified.
- ✓Standard 5-draw schedule covers major construction phases.
- ✓Verify every draw with site visit and lien waivers.
- ✓Retainage 5-10% provides punch list leverage.
Sources
- NAHB Remodeling Guidelines(2025-01-15)
- RSMeans/Gordian Residential Cost Data(2025-01-15)
Common Mistakes to Avoid
Paying ahead of verified work completion
Consequence: Loss of leverage if contractor underperforms, abandons project, or goes bankrupt
Correction: Never pay ahead—tie every draw to verified milestone completion with site visit confirmation
Not collecting lien waivers at every draw
Consequence: Unpaid subcontractors can file mechanics liens on your property even if you paid the GC in full
Correction: Collect conditional lien waivers with draw requests and unconditional waivers with each payment
Test Your Knowledge
1.What is the standard number of draws for a residential renovation?
2.What must be collected before approving any draw payment?
3.What is the purpose of retainage?