As work is completed on your new home inspections will be done by the lender. These inspections are normally performed by the appraiser and are done to confirm that work was completed so funds can be disbursed to the builder (aka "draw").
Several times during the building process your home will also be inspected by the local building inspector. Most of these local building inspectors are great people and are there to protect you. It is their job to make sure that the work was done in a professional fashion, and according to the state and local building codes.
If the building inspector passes the work, then construction can continue. If the inspector does not pass the work, then contractor must correct the work to the inspector's satisfaction before construction can continue. This can sometimes lead to some hard feelings between you, the contractor and the inspector.
My advice to you would be to make the corrections the inspector wants, if reasonably feasible, and keep the project rolling. While there is normally an appeal process to a higher government authority, it will take time and really upset the local inspector. The same inspector that may be in charge of later inspections!
If the required changes will impact your building budget try to have a meeting with the inspector to plead your case.
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