The Independent Monitoring Surveyor

The Independent Monitoring Surveyor

A Quick Guide by Michael Butcher, Associate Director

In most construction schemes and developments, finance/ funding from 3rd parties is an essential requirement.  When 3rd parties such as banks provide funding, they are taking a risk. Lenders need to know a project is viable in terms of costs, rates of returns and ability for repayments to be met. The lender also needs to know whether the scheme is deliverable, affordable, compliant, and being managed properly and that is where the Independent Monitoring Surveyor (IMS) comes in.

In its simplest terms, the IMS is the lender’s expert advisor throughout the development.
They help the lender understand what’s happening on the scheme, highlight risks, and assess drawdowns to ensure that they are justified.

Why does Independence Matter?

The IMS works solely for the lender even though the borrower usually pays the IMS fee direct or through the loan facility/ funding agreement.  This independence is crucial for the role to successfully undertaken. The lender needs honest, unbiased technical advice that isn’t influenced by commercial pressures from the borrower or contractor and follow the guidance and requirements of the RICS.

Scope of the IMS

1. Technical Due Diligence (Before Funding Starts)

Before funding agreements/ loan facilities are approved and executed, the IMS carries out a full review of the project. This is essentially a comprehensive review and assessment of the scheme.

Things that the IMS reviews are as follows;

• Validity of the proposed construction costs
• Achievability of the programme
• Status of the design
• Status of Planning including any conditions and 3rd party approvals
• Status, validity and suitability of any contracts, warranties, and insurance in place
• Capability and capacity of proposed Contractor and or Borrower if self-building.

All of this gets pulled together into an Initial Report, which the lender review and uses Iine with their Due Diligence process to form a decision on whether funding will be offered/ provided on the scheme.

2. Monitoring During Construction

Once work has commenced on-site, the IMS becomes a key part of the monthly project cycle.

Each month, they will:

• Review the contractor’s report and status of the works (including insurances etc)
• Visit site and inspection
• Check progress against the programme
• Validate construction costs and valuations
• Confirm whether a drawdown should be approved
• Update the lender on risks and issues

The IMS will then use this to collate a monthly report outlining

3. Keeping an Eye on Risk

The IMS constantly monitors what might impact programme, cost, quality or compliance.

Typical risks include:

• Incomplete design
• Delays or re-sequencing of works
• Ground conditions
• Contractor performance
• Inflation or supply-chain issues
• Planning or statutory approval delays
• Overuse of contingency
• Contractual disputes or claims

The IMS flags these early, helping lenders act before they become problems.

4. Practical Completion & Close-Out

At completion the IMS checks the following:

• Has completion been properly certified?
• Are variations, claims and final account items settled?
• Are O&M manuals, warranties and compliance documents delivered?
• Are there outstanding risks that could affect funding or occupation?

Their sign-off gives the lender comfort that the scheme is genuinely complete.

5. Support Through Exit (If Required)

While many IMS commissions finish at Practical Completion, sometimes the IMS stays involved, especially if:

• Retentions are being released
• There are defects or latent defect concerns
• A borrower/contractor issue arises close to repayment
• The lender needs reassurance during sales or leasing

Their technical insight remains valuable even near the end.

Why is IMS Role So Important?

For the lender, an IMS delivers:

• A clear view of project performance
• Early identification of risks
• Confidence that costs and programme are under control
• Support for internal credit and governance processes
• Comfort that drawdowns are justified
• Protection of the lender’s financial exposure

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