How to Set Up a Draw Schedule on a New Construction Project

A solid construction draw schedule template does more than tell the owner when to pay. It tells the lender what has been earned, tells the GC when cash should hit, and tells the subs what milestones need to be complete before money moves downstream. Without that structure, everyone feels like they are waiting on someone else.

On a new build, cash flow timing matters almost as much as margin. You can have a profitable contract and still create a financing crisis if your draw schedule does not match the real production sequence of the project.

What a draw schedule actually is

A draw schedule is the written payment plan for the job. It breaks the contract value into milestone-based requests, often tied to lender inspections or owner approval. Each draw should answer three questions: what stage of work is complete, what percentage of the contract has been earned, and what documents are required to release funds.

That structure protects both sides. The owner or bank avoids overpaying for unfinished work, and the builder avoids financing major phases out of pocket longer than necessary.

Why lenders require draw schedules

Lenders are releasing someone else's money into a partially finished asset. They need a predictable sequence that shows funds are being used to increase project value in step with progress. A clear draw schedule also helps the lender coordinate inspections, title updates, and lien waiver collection before sending the next advance.

Even on owner-funded projects, a lender-style draw schedule is useful because it reduces the most common payment arguments: whether a phase is complete, whether enough work is in place to invoice, and whether the builder is front-loading early payments.

The 5 standard draw milestones

1. Foundation. Excavation, footings, forms, rebar, slab, and the related inspections are complete.
2. Framing. Structure, roof framing, sheathing, and dry-in are substantially complete.
3. Rough-in. Plumbing, electrical, HVAC, and other concealed systems are installed and ready for inspection.
4. Drywall. Insulation, drywall hang and finish, and interior enclosure progress are in place.
5. Completion. Finish work, punch items, final inspections, and turnover requirements are done or nearly done, subject to retainage.

Those milestones are common because they align with visible, inspectable stages of value. The exact labels may change by lender or jurisdiction, but the logic is consistent.

How to tie draws to completion percentages

A draw schedule should connect each milestone to a percentage of the contract value that reflects actual cost loaded into that phase. It should not simply mirror when the builder wants cash most.

• Foundation: often around 15% to 20% depending on sitework and concrete scope.
• Framing: often 20% to 25% because the shell creates visible project value quickly.
• Rough-in: often 20% because multiple trades are loaded into this phase.
• Drywall: often 10% to 15% depending on insulation and interior prep scope.
• Completion: the remaining balance, less retainage, after final inspections and closeout deliverables.

If you want tighter control, break those milestones into sub-percentages. For example, framing can be split between structure complete and dry-in complete. That helps when weather or lead times interrupt the ideal sequence.

How to negotiate draw schedules with owners

Owners usually want protection against overpayment. Builders usually want cash to stay ahead of labor and supplier obligations. The best negotiation frame is not emotion. It is cost timing. Show when large cash needs actually hit: concrete deposits, framing labor, truss invoices, rough mechanicals, and finish packages.

If an owner asks for a tiny early draw structure, explain that the builder ends up financing the project, which increases risk for everyone. If a builder asks for oversized early draws, the owner worries about paying too much before enough value is in place. Good schedules feel fair because they reflect actual production economics.

Documentation that should support every draw

• Draw request form with the amount requested
• Photos or progress summary showing the milestone is complete
• Inspection sign-off or lender inspection report when required
• Conditional lien waivers from trades paid through that draw
• Updated budget or change-order summary if the contract value changed

The cleaner this packet is, the faster lenders and owners say yes.

A sample 5-draw percentage structure

Every lender has its own format, but a small-builder version might look like this: 20% at foundation, 25% at framing and dry-in, 20% at rough-in complete, 15% at drywall and interior prep, and 20% at substantial completion less retainage. The point is not the exact numbers. The point is that the percentages reflect when cost and value actually hit the job.

If your project has unusually heavy sitework, steel, long-lead windows, or owner-supplied finish items, rebalance the percentages so the schedule matches the real cost curve instead of a generic one-size-fits-all list.

How retainage fits into the last draw

Retainage is the small holdback that keeps documentation, punch work, and final corrections from drifting after most of the money has already been released. Even on friendly residential jobs, a modest retainage can help everyone stay focused through closeout.

Spell out whether the retainage is released at substantial completion, final completion, or only after lien waivers, final inspections, and closeout documents are delivered. If you do not define that step, the last draw becomes a debate instead of a process.

Common draw schedule mistakes

1. Front-loading draws. Early overpayment makes owners and lenders nervous and can create a trust problem that lasts the whole job.
2. Missing inspections. If the draw depends on passed inspection and nobody scheduled it, the schedule breaks.
3. No retainage holdback. Keeping some money until final closeout helps everyone stay engaged through punch and documentation.
4. Vague completion definitions. If “framing complete” is not defined, disputes show up immediately.
5. Ignoring change orders. When contract value changes, the draw schedule must change too.

Final takeaway

A draw schedule is a cash-flow map for the entire project. When it matches production, inspections, and lien paperwork, the job runs smoother and the builder looks more credible to owners and lenders.

Keep the milestones clear, tie percentages to real completion, and never treat draws like guesswork. The schedule should support the job, not rescue it.