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Products &
Services: Construction Services:
Surety:
Behind the Scenes
As your bond agent, it is our goal to clearly understand
your company's plans and aspirations in order to prevent
declinations. However, sometimes unforeseen opportunities
arise that are extremely large and complex. Assuming our
request has been denied and assuming we consider it to be a
prudent request, based upon the reason of declination, we
would handle it as follows:
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Reason for Declination |
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Resolution |
| Requested Program
Too Large |
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We would approach
the surety with detailed discussions of:
- Applying run off to
reduce work on-hand at the time the job
is to start.
- Subcontractor's Bond
possibilities
- Joint Venture
possibilities
- Methods of improving
capitalization (debt restructuring, debt
subordination, capital infusion).
|
| Location of Job not
within the Contractor's usual working territory. |
|
We would approach
the surety with detailed discussions of:
- The availability of
crews and subcontractors
- Your mobilization
strategy for handling the job
- Your familiarity and
working relationship with the owner with
whom you are dealing
- The job's profit, cash
flow and billing procedures, and how
these would affect working capital
- Obtaining bonding
company's assistance in mediating any
local issues or problems
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| Underwriter not
Comfortable with Project Difficulty |
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This requires
describing in an understandable manner: the
details of the job, specifically pointing out
the pros and cons, explaining how your firm
would go about phasing and building the job, and
how you plan on handling the specific
complexities. |
| Job Too Long to
Complete; Creating a Cash-Flow Problem |
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Providing the
details of your CPM schedule, your invoicing
schedules, job profit, and how you plan on
resolving other issues involved with a long and
complex job. |
| Owner Cannot
Confirm Financing |
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This involves a
coordinating effort in involving the bank and
other financing vehicles. Loans can be approved
subject to bonding and perhaps arrangements
could be made to make the bank a dual obligee
with the owner. |
Above are some of the major reasons for an underwriter's
decision to decline a project and how each can be resolved.
These tactics, along with coordinating your direct access to
the surety, enables you to directly communicate your master
plan. This allows you all possible opportunities to secure
the bond and complete the job without any financial
impairment or scheduling problem. We will serve as the
catalyst for ensuring this is accomplished.
However, in the event the efforts prove to be
ineffective, we will arrange for bonding through a
previously established alternative market and utilize the
same techniques where necessary.
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