What is the difference between a draw and a draw schedule?

A draw is one payment; the draw schedule is the plan for all of them. A single draw is the money released for a given period, equal to the net amount due on that period’s pay application. The draw schedule is the sequence agreed up front, how many draws, at what milestones or intervals, and roughly how much each will be, so the owner or construction lender can plan funding and the contractor can plan cash. On a lender-financed job the schedule is tied to inspected progress: the lender releases each draw only after verifying the work claimed is actually in place, which is why the draw schedule and the schedule of values are closely linked.

How is a construction draw calculated?

A draw is the net amount due on the pay application for the period. Start with the work completed to date plus stored materials, which is the total earned so far. Subtract retainage to get the amount earned less retainage. Then subtract everything already certified on previous draws, and what remains is this period’s draw. On our example: $5.4M completed plus $0.3M stored is $5.7M; less ten percent retainage ($0.57M) is $5.13M; less $4.50M already paid on prior draws leaves $0.63M as this draw. The calculation is cumulative on purpose, so an error in an earlier period self-corrects rather than compounding.

Who approves a construction draw?

On an owner-funded job the architect certifies the pay application and the owner pays it; on a lender-financed job a construction lender, often with an inspector or a title company, approves each draw before releasing funds. The common thread is verification: nobody releases a draw purely on the contractor’s word. The work claimed is checked against what is physically in place, stored materials are confirmed to exist and be insured, and lien waivers from the prior payment are collected before the next draw is funded. That verification step is why clean, well-documented pay applications get paid faster: the less the reviewer has to question, the sooner the draw is released.

Construction Glossary · Financial & Accounting

ConstructionDraw

One payment, released as the work goes in. Stack the draws and you have the project’s cash coming in.

Definition

A construction draw is a single payment released against a project as work is completed. Each draw equals the work completed that period plus stored materials, less retainage and everything already paid, which is the net amount due on the pay application. The draw schedule is the planned sequence of these payments across the job, the owner’s or lender’s plan for releasing funds against progress.

Each period’s release, stacked

Every bar adds that period’s draw to the running total. Eight periods in, $5.13M has been drawn; this period’s draw, the bright cap, is $0.63M.

How one draw is calculated

The draw is the net amount due on the pay application, built cumulatively so any earlier error corrects itself.

Work completed to date$5.40M

+ Stored materials$0.30M

= Total completed & stored$5.70M

− Retainage (10%)−$0.57M

= Earned less retainage$5.13M

− Prior draws−$4.50M

= This draw (net due)$0.63M

That net-due figure is covered in full under work completed & net amount due; the withheld slice is retainage.

How POD reads the draw

POD reads each pay application into its net-amount-due figure, the draw for that period, from the work completed, stored materials, retainage, and prior certificates on the application, and keeps the running total alongside the budget and the cash position. So the draw you are claiming now sits in the same picture as what has already been drawn and what the job has cost. POD computes and surfaces the figure from the pay app you give it; it does not disburse the money, approve the draw, or run a lender’s draw schedule, which stay with the owner, the lender, and their inspectors.

Construction billing methods guide

Frequently asked questions

The draws are the cash curve

Stack every draw and you have money coming in. Set it against cost going out and you have the project’s cash flow.

Construction Cash Flow Back to the Glossary