Lender’s Independent Engineer Report is primarily to safeguard the interest and minimize the risk of the lender, which can be a banker, investor, or any other financial institution. To understand its relevance, let’s find out more in detail.
Lender’s Independent Engineer Report
With the financial expertise, a lender’s Independent engineer report is prepared to ensure the interest of the lender and protect them against various risks involved. This specialised service of independent engineer report is a thorough assessment of the project report. These reports are majorly required for real estate projects, SEZ, and other infrastructure projects.
The priority of an Independent Engineer Report is to provide the client with a detailed review of the proposed project’s documents and the evaluation of the technical design to validate the eligibility and other compliances of the project. Whether it is up to the mark to meet contractual expectations or not.
Request for Lender’s Independent Engineer Report is raised for any M&A Transaction, Construction Loan, Commissioning, or a Long-Term Loan, etc. However, these reports vary due to different components involved in multiple industries as per the specific requirements of the client and the stage of construction of the project.
Now, let’s understand the role of a Lenders Independent Engineer
Substantial and definite advantages can be brought by a trained, committed and neutral Lender Independent Engineer. The benefits of an LIE’s services in project monitoring are never limited to just providing security to lending institutions. They are also an important part of risk management and value addition for the developer himself.
The LIE is backed by sound technical knowledge. Hence LIE plays a vital role in overall project monitoring and coordination by providing regular technical feedback.
The feedback can help developers in presenting a more accurate and convincing picture of the progress that the project is making at important meetings.
The expert inputs can also help reduce the chances of project failures due to any conflict among the participants in a project. If the project manager lacks information or knowledge on a particular topic, then these inputs can avoid project failures.
These expert inputs also help to avoid indecisiveness among project participants on key decisions.
Professional project development and monitoring agencies bring in best practices on processes which even the developers can take time to learn and adapt. Increased efficiency in the development process leads to the finished product. Apart from this, proactive identification of risks can lead to better planning which subsequently leads the company in saving up to 10% on the project costs.
- Hence it is recommended for lenders to involve an LIE at the pre-investment stage.
- In this manner risks like labour availability, uncovered project costs, overall specification and project costs can be identified on time.
- Both the parties, the lending institution and the project developers must be aware of new technologies and the cost-benefit analysis before they can be leveraged for a more efficient project development.
- Social factors like environmental, health and safety practices need more emphasis than they are currently being given in the Indian construction industry. Only a neutral and well-qualified person whose concerns go beyond time and cost savings can help by providing impartial guidance on these concerns.
Advantages of Lenders Independent Engineer Report
Based on the current practices and services delivered by Lenders Independent Engineer Report service providers. Here are a few benefits that you should know about:
- Helps in identifying the potential risk
- Generates detailed performance analysis of third parties
- Suggests further suitable recommendations