1.01 Inspection Services: The Consultant will provide all necessary professional and, administrative staff and resources to periodically inspect the construction site to observe and evaluate the progress and quality of the work, and maintain necessary records of meetings and observations in accordance with the format outlined as follows and as in Appendix B:

1. Approved Inspectors ("AI") will provide the observation services required hereunder. If that inspector does not perform the observations for whatever reason, PNC reserves the right to terminate this contract. Unless the AI leaves the Consultant, the AI will not be removed from the project without the prior consent of PNC. PNC reserves the right to demand the replacement of an AI with another AI approved by PNC.
2. Perform site observations coordinated with the contractor's request for payment no less frequently than once per month to allow the AI's attendance at the monthly job progress meeting. Attendance at the monthly site meeting is required unless previous arrangements have been made with the PNC's Construction Services Department. The periodic report should note who is in attendance at the draw meetings, and which individuals were interviewed by the consultant.
3. Evaluate and comment on the ongoing quality of construction, and conformance with construction documents, noting if there is evidence of good trade coordination, good construction management and good quality control.
4. If applicable, confirm that the developer's, or contractor's 3rd-party, quality control/assurance program, as originally described and reviewed, is in effect. Note if necessary field monitoring and testing has been performed and if the reports have been satisfactory. Clearly identify in the report any deficiencies or concerns noted during the inspection and highlight those requiring further attention. Track deficiencies or concerns from previous reports and monitor their status, noting the recommendations of the design team and indicating final resolution.
5. Review and evaluate the progress of construction, and comment on the progress to-date relative to the approved schedule and substantial completion date in the contract, noting variances. Confirm the current completion date, as determined by the construction contract, and note any changes. Provide an independent estimated date of completion based on consultant's observations.
6. Ensure that minutes of the meeting are kept by the Project Team, circulated to all parties, and included as an attachment to the periodic monthly report.

1.02 Contractor's Payment Request: The Consultant will review all payment requests and requests or change orders and advise PNC of the following:

1. Review the contractor'’s periodic payment request, trade payment breakdowns and invoices (when available) and evaluate the accuracy of the represented percentage of completion for EACH item on the contractor's cost statement.
2. Confirm that the amounts requested reflect work earned under the approved contract(s), subcontracts, and change orders and, to verify the amounts earned.
3. Provide an opinion as to whether or not the change in project costs associated with any historic preservation Part 2 Amendment is sufficient and reasonable. (Only applicable on HTC deals)
4. Confirm and provide commentary that any significant change orders or change orders requiring a design change have been approved by both the architect and the historic preservationist (as applicable), and adequate supporting documentation has been provided.
5. Provide an opinion as to whether or not the change in project costs associated with any historic preservation Part 2 Amendment is sufficient and reasonable. (Only applicable on HTC deals).
6. Confirm that any significant change orders or change orders requiring a design change have been approved by both the architect and the historic preservationist. (Only applicable on HTC Deals).
7. Review the documentation supporting payment requests for stored materials and confirm compliance with the requirements, see Appendix D. Provide separate descriptions of all materials stored on or off the construction site. Inspection of off site stored materials will be performed at the request and approval of PNC and will be invoiced as an additional service.
8. Review each request for release of retainage and evaluate its appropriateness and compliance with the requirements of the Construction Contract, and note any exceptions.
9. Highlight all changes/reallocations to the schedule of values from the prior month.
10. Verify the Application for Payment on a line item basis to confirm the amounts requested, prior payments and the amounts due, noting any deviations.
11. Each month, as soon as practical, the Consultant will issue a written report describing its conclusions regarding the review of the contractor's periodic payment request and evaluating the accuracy of the percentage of completion for each line item on the contractor's cost statement.
12. Review, evaluate, and provide commentary on potential change orders, change orders and change order proposals for reasonableness and impact on the budget, schedule and quality of the project and recommend approval or disapproval.
13. Evaluate on the adequacy of the construction funds remaining after each payment to complete the project, noting any cost exposure including those due to pending building law or regulation revisions, not included in the construction contracts.

1.03 Reports: The Consultant will submit the following reports:

1. Monthly Inspection Reports: Consultant will submit an electronic copy of the complete written report within two weeks of the monthly inspection to PNC addressing all of the requirements of Section 1.01 and 1.02. If the APPROVED draw request is NOT available to allow a complete report to be submitted by the due date, it is the consultants responsibility to notify the PNC designate in advance of the due date for further direction and guidance. An electronic copy shall be concurrently sent to Investor Limited Partner and Construction Lender, if applicable.

The periodic progress report must include a brief description of the proposed project.

Include a minimum of sixteen (16) color photographs that are captioned and descriptive of the quality of construction with each periodic report. Photographs and captions should evidence the Consultant's particular attention to quality of construction and the number of photographs should increase as onsite activity increases. Observed construction details or problems, or other significant conditions noted in the written report will be accompanied by descriptive photographs as needed.

Include a statement that is based on the Consultant's, belief and knowledge, the construction is (or is not, as applicable) proceeding in accordance with approved plans, specifications, and applicable laws and regulations.

2. Reporting Responsibilities: The Consultant will report directly to PNC. If specifically directed by PNC, all requests for information from the General Partner/Developer will flow through PNC. PNC retains the right to deliver copies of the Consultant's reports to the General Partner/Developer AOR or Engineer, Contractor, or other interested parties for their review and comments.
3. Pro-Active Requirement: PNC will provide some information for the Consultant to review as it comes available; but the Consultant should use all resources available and contacts provided to gather, understand and evaluate the information. PNC will assist the Consultant when required to obtain such additional information or clarification.

PNC expects the Consultant, without prompting from PNC, to follow up on any outstanding or unresolved documents or issues noted in the Pre-Construction Review, whether the Consultant conducted the review or was provided with a copy of the review performed by another Consultant. When Consultant cannot achieve resolution, Consultant must notify PNC of issues that require assistance in resolving.

4. Final Report: As a condition of final payment, upon substantial completion of the Work as evidenced by issuance of a Certificate of Substantial Completion from the AOR and/or a Certificate of Occupancy from authorities having jurisdiction over the Work, the Consultant will prepare a final report stating that the entire project is substantially completed in accordance with the project documents including change order modifications, and that the Consultant has received the punch list and finds it adequate.

The final report will summarize the conformance to design specifications, the general quality of the completed project, and any potential maintenance problems to be corrected prior to release of retainage. The final report will confirm what equipment and systems have had final testing and are operating, as well as what operating manuals, maintenance instructions, attic-stock, "as-built drawings", warranties and guarantees have been submitted to the Architect of Record and Owner.

The final report also needs to include a physical review of 20%, or a maximum of 15, completed units, with the property manager if the units are occupied. The selected units should be a random mix of unit types across the site and from as many building as possible. The list of "reviewed" units can be units that have been previously reviewed during the monthly periodic inspections, as long as they are considered complete and the required documentation is maintained. This information should be provided in an "inspection log" table noting the date, time, unit number, occupied/vacant, and condition, and include an interview with the property manager, maintenance staff, and a general review of the properties maintenance logs. This report should include ALL aspects of the site whether included in the SOW or not, as items that may not have been originally included in the SOW have aged and may have been damaged during construction, which will necessitate repairs/improvements in the near future from Capital reserves.

5. Warranty Inspection: PNC MAY request a warranty inspection after substantial completion and prior to expiration of the warranty, typically around 11-months from completion for work completed during the contractual scope of work. This report will be similar to the "final" report, and covers 20%, or a maximum of 15, units across the property, noting any maintenance issue, potential maintenance issues, or problems identified. The punch list, and associated sign off should be reviewed, and the local building department should be contacted to enquire of any open/outstanding issues with the property.