All the warning signs are out there – your contractor doesn’t seem to be able to close out jobs, or jobs are significantly over or under budget. The contractor’s cash-flow position seems tenuous with no sign of realistic forecasting, or the contractor doesn’t seem to have a handle on indirect and G&A overhead rates. How can you help troubled contractors?


Allstar Surety Fidelity

  1. Communication: Contractors, even those with whom you have worked with for years, may not know all the resources that bond companies have available to assist them – including help with closing out jobs, accounting resources, or legal resources. Make it your job to communicate your ability to help them get back on track.

  2. Review cost structure: It may be that your contractors need help with making cost-cutting decisions. You can help them take a step back to determine where they can trim the fat without affecting the integrity of the project.

  3. Help your contractor prequalify subcontractors: Even though they might have worked with subs for years, it’s still good to review contracts, and ensure that these subcontractors are doing a good job at a fair price.

  4. Make sure controls are in place for billing, project management, and bidding: Improve timeliness and accuracy of billing, make sure that regular project management meetings are taking place, and verify that the bidding process has integrity and best practices incorporated.

  5. Help restructure debt: Find short-term and long-term solutions to help free up working capital in contractors’ LOC.

  6. Help set a realistic surety program expectation: Advise contractors to focus on profitable projects where the size and scope is within their capacity.

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