Percentage of Completion ---Progress Payments

Percentage of completion is the most common form of the progress payment system used by
lending institutions and incorporated into Fixed Fee Construction Contracts. Aside from the
cost plus a fee this method provides the lending institution, and owner, a high level of surety
that funds are appropriately dispersed for the value of Work in Place. Umpqua Bank utilized
this form of Progress Payment to make periodic disbursements to the Owner and Contractor,
per the loan agreement and Construction Contract

In the normal process of work, a periodic Construction Draw Request will be prepared and
signed by the Contractor with estimates of completion, in each area or line item of the
Contract Budget. This is then reviewed, approved, and signed by the Owner to be submitted to
the Bank, which is followed by a visual inspection by a bank agent to verify the accuracy of the
request. Once these steps are complete the Bank will fund the request. The payment is not
meant to accurately represent the actual dollars that the contractor has spent, but the value of
work complete based on the estimated percentage completed of each line item multiplied by
the dollars budgeted for each.

The Bank and owner enjoy the added surety that during the time this draw request is in process
for 30 days or more, and before funding, the contractor has continued work on the project, and
by the time the contractor has received payment on a draw request, they will now have
completed more work, ordered more material, contracted for additional services, supported
the job with continuing supervision and overhead. The result being that the contractor has
added additional value beyond the dispersed loan amount

The Meyer residence has completed the rough frame inspection phase, which allows for
sheetrock, (which has been stocked), to proceed. The interior has pick up work yet to
complete, and the electrician was awaiting a final review of the work with owner (agreed on
meeting 08/20/16) previous to his completion and sheetrock covering the walls. IN my
percentage of completion worksheet, funds have been withheld from --framing 401 and 402,
and electrical 503 to cover these costs. All other items are in a static condition due to the
stoppage of the job

I have visually inspected the Meyer Residence, reviewed the county inspection records, and
construction invoices, from which I have estimated the percentage of values completed per
each line item included in the Umpqua Bank Construction Budget to reach a total % complete .
Following generally accepted approval practices; I project the net Percentage of Completion to
be 72% with $328,365.51 of the Value of Work completed