Construction Finance Skip to main content

Construction Finance

Construction finance refers to the financial arrangements that are put in place to fund the construction of a building or other type of infrastructure. This can include the financing of materials, labor, and other costs associated with the construction project.

There are a number of terms that are commonly used in the context of construction finance. Some of these terms include:

Construction loan: A type of loan that is used to finance the construction of a building or other type of infrastructure. Construction loans are typically short-term loans that are repaid once the construction project is complete.

Hard cost: The cost of materials, labor, and other tangible items that are necessary to complete a construction project.

Soft cost: The cost of non-tangible items that are necessary to complete a construction project, such as permits, fees, and insurance.

Draw: A payment made by the lender to the borrower during the construction process. Draws are typically made in installments as the construction project progresses, and are used to pay for materials, labor, and other costs associated with the project.

Retainage: A percentage of the construction cost that is held back by the owner until the construction project is complete. Retainage is often used as a way to ensure that the construction project is completed to the owner's satisfaction.

Change order: A document that outlines any changes or modifications to the original construction contract. Change orders can include additional work, changes to the scope of the project, or changes to the schedule or timeline.

Completion bond: A type of insurance that protects the owner of the construction project against the risk of the contractor failing to complete the project as contracted. Completion bonds are often required by lenders as a condition of financing a construction project.

I hope this information is helpful! Let me know if you have any other questions.


Popular posts from this blog

Great Man-Made River (GMR)

Libya's Great Man Made River: The Great Man-Made River in Libya is one of the most ambitious Civil Engineering Project in history of mankind.  In the year 1953, the Libya Government found out not only vast oil reserves but also vast quantity of fresh water locked under the strata, most of the water was trapped around 7000-30000 years ago which is divided in 4 different basins. The first basin is named Kufra basin which is neat Egypt Border which covers almost 35000 sq kilometer which is quite deep around 2000 m deep. The other basin is in Sirte Basin which cover 10000 sq kilometer, third in Murzuk Basin and the last in Jabal Fezzan Basin covering 4800 sq kilometers area.  The GMR project will be used to transfer water to North of the country to provide water for irrigation purpose for more than 6 million  people. This will be a changing point  for Libya and the Colonel Muammar Gaddafi called it the Eighth Wonder of World. The work started in 1984 of the project and estimated to be