Category: Construction Bond

OSHA Fines Contractor $287,000 in Arkansas Due to Employee Safety Issues

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. Behind the Headlines In June 2022, two construction company employees in Arkansas lost their lives in a tragic workplace incident. The first worker entered a newly installed 20-foot-deep sewer manhole to perform a test and soon lost consciousness. A coworker attempted to rescue him but soon lost consciousness as well. Both workers later died from lack of oxygen in the confined space. The following OSHA investigation found that the employer not only failed to obtain the permits required by federal law for the work. The company, which specializes in concrete and tunneling work and wastewater pipe construction, also did not test the oxygen level before sending a worker into the manhole. With proper pre-entry planning, the lack of oxygen and the resulting need for ventilation would have been detected through testing.  Additionally, the employer had not trained its employees on the proper procedures for entering a confined space nor equipped them with rescue equipment. The company was subsequently fined...

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Dodge Data Concludes Recession in Construction Unlikely in 2023

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. Significance of Economic Forecasts in Construction The construction industry typically looks to Dodge Data & Analytics for economic forecasts to guide planning related to workforce development, equipment purchases, project financing, and other short- to medium-term business decisions. The big question for the construction industry in the first quarter of 2023 is whether the U.S. economy is likely to enter into a recession this year and, if so, how bad are things likely to get. The Construction industry relies on research and forecasts from other sources in addition to Dodge Data & Analytics, such as the National Association of Home Builders, the Equipment Leasing & Finance Foundation, and other industry groups, as well as a variety of private research firms. Predictions about the likelihood of a recession in the construction industry take into account such factors as: Inflation Interest rate movements Unemployment rates and job creation in various sectors of the economy Planned construction, and actual construction starts (residential, commercial,...

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Early Impact of IIJA on Roads

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. What Is IIJA? When President Eisenhower signed legislation appropriating funds to build the U.S. Interstate Highway System of roads, bridges, and tunnels that greatly increased the ease of traveling from one state to another, coast to coast throughout the nation. Officially known as the Dwight D. Eisenhower National System of Interstate and Defense Highways, one of its purposes was to facilitate quick mobilization and movement of military troops and equipment when necessary. By the early 1990s, there were nearly 45,000 miles of interstate highway, giving people unprecedented mobility and spurring the growth of interstate commerce. However, nobody expected the highway system to last forever. The money appropriated for maintaining it ran out in 1972, and since then funding has relied on a gasoline tax. Over the decades, it became increasingly apparent that the nation’s highways were falling into disrepair. That was made abundantly clear by the 2007 collapse of a section of a bridge on I-35 outside of Minneapolis...

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What Is Extended Pay?

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your performance and payment bond needs. What Are Performance Bonds? To understand what is extended pay, you must first understand how performance bonds work. Purchasing a performance bond (as well as a payment bond) is a legal requirement under the federal Miller Act of 1935 for being awarded a federally funded contract in excess of $150,000. Similar legislation exists in most states for state-funded construction projects. And private project owners increasingly are requiring performance bonds from their contractors. A performance bond provides financial protection for project owners in the event that a contractor fails to bring a project to successful completion. Performance bonds are issued in specific amounts (usually to cover the full project cost) and for a specific length of time, by the end of which the job should be completed. Each performance bond is a legally binding contract among three parties: The “obligee” (the project owner requiring the bond), The “principal” (the contractor required to purchase the bond), and The “surety”...

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What Are Underbillings?

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your performance and payment bond needs. What Are Underbillings? The Definition in Construction Underbilling occurs when costs have not yet been billed or reimbursed. The accounting method most commonly used by contractors to report earnings is the percentage of completion (POC) method. A project’s revenue is calculated using the contract price and the percentage of completion and very rarely matches the amount billed. The difference between the two is either an underbilling or an overbilling. POC accounting determines the percentage of work on a project completed as of a particular date, based on the costs incurred to that point as a percentage of the total estimated costs for the project. For example, when a contractor reports having incurred 50% of total project costs but has billed only 35% of the total contract price, there is an underbilling of 15% of the contract price. Why Does Underbilling Occur? Underbilling is fairly common. Underbilling of costs typically is the result of: Slow billing that occurs...

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What Is a Work in Progress Schedule?

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your payment and performance bond needs. What is a Work in Progress Schedule Report (WIP) in Construction? A work in progress schedule, also referred to as a WIP report, shows where a project stands in terms of completion and billing as of a certain date. It’s an important management tool for keeping a project on track and financially healthy. How Often Are Work in Progress Reports Generated? There is no hard and fast rule governing how frequently WIP reports should be produced on a given project. Ideally, key project personnel, particularly the project manager, is getting together with the accounting folks on a regular basis, perhaps even weekly. During those meetings, information is shared and inconsistencies are addressed. The project budget and schedule are rough benchmarks for where the project should stand at any particular point in time. Construction companies commonly use the percentage of completion accounting model. Costs that have been billed are deducted from the total gross profit forecast for the...

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What Is Profit Fade?

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your performance & payment bond needs. Profit Fade Defined Profit fade is what happens when profits on a construction project are gradually reduced over time as work on the project progresses. Surety companies typically require periodic financial reports throughout the duration of a construction project. These reports are prepared using the percentage of completion accounting method. Each report specifies the percentage of the project that has been completed to date and the profit recognized as of the date of the report. Ideally, when a contractor reports that 50% of a project is complete, the profit recognized at that point and added to the contractor’s P&L statement is also 50% of the total estimated profit for the job, or $50,000. At the 75% completion mark, 75% of the profit should have been recognized, adding $75,000 to the P&L statement. Upon project completion, 100% of the estimated profit should be accounted for. Profit Fade Example Profit fade occurs when the profit recognized at a certain...

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NAPA Adds Net-Zero Climate Partners

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. What Is the Road Forward? The National Asphalt Pavement Association (NAPA) represents the interests of companies producing asphalt pavement material, interacting with Congress, various government agencies, and other trade associations. NAPA provides thought leadership and research that helps the industry develop and employ sustainably produced asphalt paving materials. NAPA established The Road Forward initiative with the goal of the asphalt industry achieving net-zero carbon emissions by 2050. Partnering with NAPA member organizations brings insights and fresh perspectives to the effort to reduce scope 1 carbon emissions generated in the process of producing asphalt paving materials. NAPA established member-partnerships with these three producers in 2022: Summit Materials, based in Denver, Colorado—a NAPA member since 2010, Kokosing Materials, based in Columbus, Ohio—a NAPA member since 1985, Kraton Corporation, based in Houston, Texas—a NAPA member since 2011 Both Summit and Kokosing produce asphalt paving mix, aggregates, and other paving materials. Kraton produces polymers used to modify asphalt binders used in paving and...

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10 Reasons to Install Solar Panels in Your Next Build

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. Benefits of Integrating Solar Technology into Building Processes The key to success in the construction industry is to provide clients with what they need and want while maintaining high quality at a reasonable price. In the 2020s, renewable energy will be a top priority for both residential and commercial building projects, and solar panel installation will be a popular way for homeowners and businesses to reduce their carbon footprint. Integrating solar technology during construction or remodeling offers benefits for all parties involved—builders, clients, municipalities, and the planet itself. Below we have 10 reasons to install solar panels in your next build. Reasons to Install Solar Panels Benefits for Builders Builders can lower their own operating costs and reduce their carbon emissions by adopting renewable energy for operating tools and equipment. The federal government and many states offer tax rebates and other financial incentives for the purchase of solar energy systems, but those incentives are for a builder’s clients, not...

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What is a Home Improvement Contractor’s Bond?

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. Who Needs a Home Improvement Contractor’s Bond? Some states don’t require contractors to be licensed or bonded, regardless of the kind of construction work they do. Other states require contractors to be licensed, but not bonded. And in some states, home improvement contractors are exempt from the license and bonding requirements that apply to other contractors. To make things even more complicated, in states that do not require home improvement contractors to be licensed or bonded at the state level, they may be subject to local licensing and bonding requirements, either at the county or city level. When this is the case, the local jurisdiction (the “obligee” requiring the bond) has established the required bond amount at $10,000. To add another level of complexity, any license or bonding requirements may depend on the dollar value of the projects the contractor undertakes. For example, in certain counties in Tennessee (Bradley, Davidson, Haywood, Hamilton, Knox, Marion, Robertson, Rutherford, and Shelby), home...

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