An Estimator’s Guide to Understanding Contract Surety Academy... · Mike Kelly, Risk Consultant mkelly@thomasmcgee.com (816) 843-4439 Tom Latz, Risk Consultant tlatz@thomasmcgee.com

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An Estimator’s Guide to

Understanding Contract Surety

Presented By: Mike Kelly & Tom Latz

Thomas McGee, L.C.

February 1, 2013

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Contract Surety Bonds

• Bid Bond

• Performance Bond

• Payment Bond

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Who Requires Bonds?

• Public Sector

– Federal Government

– State & Local

Governments

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Who Requires Bonds?

• Private Sector

– Private Owners

– Lending Institutions

– General Contractors

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Principles of Contract Surety

Surety

Obligee Principal

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Prequalification

Financial

Strength Character Experience

Equipment Credit

History

Banking

Relationships

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Prequalification

Capital

Capacity

Character

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Prequalification

Capital Financial statements

Working capital

Work-in-progress

Indemnity

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Prequalification

Capital Financial statements

Working capital

Work-in-progress

Indemnity

Capacity Resumes

Contingency plan

Business plan- short &

long term

Equipment

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Prequalification

Character Reputation

Relationships

References

Capital Financial statements

Working capital

Work-in-progress

Indemnity

Capacity Resumes

Contingency plan

Business plan- short &

long term

Equipment

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Benefits of Surety Bonds

• Qualified bidders

• Reduced risk of liens

• Timely project completion

• Defect protection

Owner

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Benefits of Surety Bonds

Contractor

• Contract reviews

• Continuity plans

• Expertise

• Project qualification

• Private construction

• Lending institutions

• Subcontractor protection

• Technical, managerial, financial assistance

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Additional Items

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Additional Items

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For More Information

920 Main Street, Suite 1700

(816) 842-4800 | Toll Free (800) 423-9044

www.thomasmcgee.com

Mike Kelly, Risk Consultant

mkelly@thomasmcgee.com

(816) 843-4439

Tom Latz, Risk Consultant

tlatz@thomasmcgee.com

(816) 843-4481