Educational overview only. Prudent Guardian (www.inspirecodingedu.com) is not an insurance company, broker, law firm, or registered investment adviser, and does not provide personalized insurance, investment, tax, medical, or legal advice. Verify details with licensed professionals and official issuers.
You are adding the original sum and the approved orders. One order is still proposed. The crumpled time-stamped change order slips sit stacked to the left of your keyboard, each marked with a foreman’s signature and line-item cost breakdown. You cross-reference each entry against the initial contract values pulled up in a separate tab, double-checking that no approved work is left off the running total. The unapproved proposed order sits in a separate manila folder off to the side, so you don’t accidentally fold its cost into the final calculation for this draw.
Core Line Item Definitions for This Draw Request
The two core lines that make up your adjusted contract value for this draw are clearly defined to eliminate confusion during review. The first line is the original contract sum, the fixed value agreed to by all parties when the initial construction contract was signed, covering all base scope of work outlined in the original project blueprints, timeline, and scope document. This line does not include any allowances that require separate approval to access, nor any adjustments for work that was added or removed after the contract was executed. The second line is the approved change order total, the sum of all fully executed, signed change orders that have received written approval from both your project management team and the project’s owner representative. Each included change order corresponds to work that is either fully complete or actively in progress as of the date of this draw request. The proposed change order you set aside is excluded from this line entirely, even if you have started preliminary work on that scope, as it has not received the required dual approval to be considered part of the official contract value.
Follow these steps to calculate the combined controlling value for this submission:
- Pull the original contract sum directly from the first page of your signed construction agreement, cross-referencing to make sure you have not accidentally included any contingency funds or unapproved allowances that are not eligible for draw requests at this stage of the project.
- Gather all fully approved change orders, sorted by their approval date, and tally their individual cost adjustments, accounting for both positive additions for extra work requested by the owner and negative credits for scope items that were removed from the original project plan, to get a total approved change order value.
- Add the original contract sum to the total approved change order value to get your current adjusted contract value, the maximum total amount you are eligible to request over the full course of the project under the currently approved scope.
- Cross-check the adjusted contract value against your documented work completed percentage to confirm the specific amount you are requesting in this draw does not exceed the value of work that has been finished and inspected to date.
Illustrative example: If your original contract sum is $428,500 and your total approved change order value is $37,200, your adjusted contract value for this draw is $465,700, and you would only request a portion of that total aligned with the 62% of work you have confirmed complete as of your submission date.
Controlling Value Marking for Submission
The adjusted contract value you calculate is the controlling value for this draw request, meaning it sets the upper limit for the total amount you can request for work completed to date, and it supersedes any earlier preliminary value calculations you may have drafted before all change orders were fully approved. You mark this controlling value in bold, 14-point red font in the top right corner of this page, so anyone reviewing the draw request can immediately locate the official maximum eligible value without sifting through supporting documents. You add a small, handwritten note next to the controlling value indicating it excludes the one pending proposed change order, so there is no confusion if that order is approved later and added to future draw calculations. You cross out any incorrect preliminary totals you jotted down in the margins earlier, initialing next to each cross-out to confirm you intentionally removed those incorrect values to avoid conflicting data during review. You attach this page to the front of your draw packet before you submit it through Draw Jacket, so reviewers can quickly verify the math behind your adjusted contract value without digging through the full contract and change order files.
Storage Protocol for This Calculation Page
Once you submit the draw request, you take steps to store this page properly so it is easy to locate if any questions arise about your value calculation, or when you prepare the next draw request for the project. First, you save a digital copy of the page in your project’s shared cloud drive folder labeled “Draw Submissions” under the subfolder for this specific draw date, naming the file with the project number, draw date, and “adjusted value calculation” to make it searchable for anyone on your team with access to the drive. Next, you print a physical copy of the page and file it in your project’s physical binder in the “Change Order Tracking” tab, directly behind the stack of approved change orders you used to run the calculation, so you can quickly pull the supporting change orders if the calculation ever needs to be verified. You add a direct link to the digital copy of the page in your project management dashboard’s draw submission log, so any team member working on billing or project tracking can access the calculation without needing to ask you for the file directly. You also staple the scratch paper you used to run your initial math to the back of the physical copy, so you can retrace your steps quickly if a discrepancy is flagged during the draw review process.
Next Time You Open This Calculation Page
When you pull this page up to prepare the next draw request for the project, you will follow a consistent set of steps to update the value calculation to reflect any changes that have occurred since this version was finalized. First, you will review your change order log to confirm if any new change orders have received full written dual approval since this calculation was completed, adding their total adjusted value to the existing controlling value to get an updated adjusted contract sum for the new draw. You will also check the status of the currently proposed change order that was excluded from this calculation: if it has received full written approval from both parties, you will add its total value to the adjusted total, and if it is still pending or has been formally rejected, you will leave it out of the calculation entirely. You will add a new line to the bottom of the page with the new calculation date, the total value of any newly approved changes, and the updated controlling value, so you have a running log of all adjusted contract value changes over the full course of the project. You will also cross-reference the updated controlling value against the total amount you have already drawn for the project, plus the remaining value of work left to complete, to make sure your total requested draws never exceed the adjusted contract value at any point in the construction timeline. If you identify any gaps between the adjusted value and the projected cost of remaining work, you will flag that for your project manager to address with the owner before you submit the next draw request, to avoid delays or misalignment on project costs later on. You will also confirm that the work completed percentage you use for the new draw matches the most recent inspection reports, so your requested amount aligns with the actual progress made on site.
