Category: Construction Bond

Performance Bonds for Contractors with Bad Credit

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 bond needs. Understanding the purpose of performance bonds and how they work is key to understanding why bad credit will affect performance bonds. What Are Performance Bonds? Performance bonds are a type of construction surety bond commonly required of contractors. Under the federal Miller Act, contractors working on federally funded contracts in excess of $150,000 are legally required to furnish the project owner with a performance bond, as well as a payment bond. Most states have enacted similar legislation (“Little” Miller Acts) requiring performance and payment bonds from contractors working on state-funded projects of $100,000 or more. And private project owners and lenders increasingly are requiring performance bonds and sometimes payment bonds from contractors working on larger projects. The purpose of a performance bond is to protect the project owner financially if the contractor defaults on the contract and is unable to complete the job. One of the main reasons for default is a lack of capital to finish the job,...

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What Are Recession Proof Sectors in the Construction Industry?

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 Impact of Recession on Construction? The construction industry always is adversely affected during recessionary periods in the U.S. economy. During the Great Recession (December 2007 – June 2009), the U.S. construction industry saw nearly 2.5 million layoffs and the demise of nearly 150,000 construction companies. In fact, the financial pundits are divided in late 2022 about the likelihood of a recession during the coming months, as interest rates are increased to combat high inflation. There’s no sense in gambling one way or the other, as making the wrong judgment call can be ruinous for a construction company, especially for smaller contractors with limited financial resources. It does make sense, however, for contractors to position themselves to have the best chance of survival in the worst case scenario. The primary strategy for recession-proofing your construction business is to seek building projects in the industries generally considered to be recession proof sectors. What Are Recession Proof Sectors? The...

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Broadband Infrastructure Bill

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. Funds for Broadband Infrastructure Bill Development The infrastructure investment and JOBS Act (IIJA) set aside $65 billion for broadband infrastructure bill deployment and affordability. The Broadband Equity, Access, and Deployment (BEAD) program will be distributing $42.45 billion of those funds to states and territories through the Office of Internet Connectivity and Growth within the National Telecommunications and Information Administration (NTIA). An additional $2 billion will be provided by NTIA through its Tribal Broadband Connectivity Program for broadband deployment and related services on tribal lands. And another $2 billion for broadband development will be distributed through the Department of Agriculture’s Rural Utilities Service, the Distance Learning, Telemedicine, and Broadband program. It’s an investment that will make a tremendous difference in the lives of people living in previously unserved or underserved areas with little or no access to broadband Internet service. Encouragement for Public-Private Partnerships IIJA specifically encourages states to promote partnerships between public and private entities to plan and execute...

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Performance Bond Underwriting Process

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. Underwriting Goals A performance bond underwriting process of any kind has two main goals: Assessing the risk of the contractor incurring claims if approved for a performance bond, and Assessing the financial risk to the bond’s guarantor in the event of claims against the bond. The results of this underwriting assessment determine whether an applicant is approved for a performance bond and, if so, how much the contractor will pay for the bond. How Performance Bonds Work These underwriting goals are derived from the way that performance bonds work in the construction industry. First, understand that performance bonds provide financial protection for the project owner (the “obligee”) requiring the bond, not for the contractor. A performance bond is a pledge by the contractor (the bond’s “principal”) to complete the work specified in the construction contract in accordance with the law, and the terms of the contract and of the surety bond agreement. Any violation by the principal...

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IoT in Construction Trends

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 bonding needs. What is the Internet of Things? Oracle defines the Internet of Things (IoT) “the network of physical objects—“things”—that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet.” These devices can be anything from household appliances to sophisticated manufacturing systems. The number of connected IoT devices is expected to reach 22 billion by 2025. The IoT is made possible by low-cost computing, cloud storage, data analytics, and mobile technologies–which allow physical things to collect and exchange data without intervention by humans. The IoT exists at the intersection of the physical world and the digital world and is becoming increasingly helpful in construction for budgeting and resource management, among other things. How Does the IoT in Construction Apply? IoT technology holds great potential for increasing efficiency, productivity, and safety in the construction industry, largely because it allows construction firms to respond quickly to changing requirements. There...

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Integrated Digital Delivery Guide

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 bonding needs. What Is Integrated Digital Delivery? Integrated Digital Delivery (IDD) has been defined as “the use of digital technologies to integrate work processes and connect stakeholders working on the same project throughout the construction and building life cycle.” It developed as a solution to the many problems in trying to meet the information needs of the large number of stakeholders in many construction projects—owners, architects, engineers, contractors, and so on. Such problems often result in rework, delays, and cost overruns throughout the project. The technologies exist to produce, transmit, store, and access digital data from every phase of a project. IDD integrates that data to facilitate coordination and collaboration among stakeholders to improve data-based decision-making and project management. 4 Project Phases The technologies and activities that generate and use data are identified below for each of the four major phases of a construction process. Phase 1: Digital Design During the design phase, the building design is created according to the...

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Metaverse and Construction Guide

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 bonding needs. What Is the Metaverse? The metaverse is an immersive digital universe accessed through the Internet that, according to one definition, “combines aspects of social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to interact virtually.” Users choose avatars to represent them in the virtual worlds that make up the metaverse. They can play games or engage in other activities in a virtual world to earn cryptocurrency. That cryptocurrency has value in the real world as well as in the metaverse. Even big-name companies like Heineken, Louis Vuiton, Nike, Tinder, ROBLOX, and Spotify have a commercial presence in the metaverse. Real Estate in the Metaverse New virtual worlds are being created all the time, and each of these platforms has its own chosen cryptocurrency with which users can shop, engage in various recreational activities, or buy and sell real estate, from either the platform or a virtual developer. They can even build homes or...

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Guide to Data Democratized in Construction

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 bonding needs. What Is Data Democratized? Data democratized is data that can be accessed by everyone who needs it. Democratization is important in any business that involves data used by multiple people or multiple teams within an organization. But it is particularly important in the construction industry, where one wrong number, one inaccurate measurement, or one incorrect tolerance can cause delays, rework, and cost overruns. When everyone has direct access to the same data, from the same source, they are all on the same page, so to speak. When there are updates to project data, democratization ensures that nobody is acting based on obsolete information. How is Construction Data Democratized? Construction companies are successfully democratizing data by integrating data from multiple systems in a cloud-based BIM collaboration platform. It’s estimated that as much as 95% of data generated or collected in the course of a construction project isn’t being used, largely because it is trapped in data silos. Many organizations, not...

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Design-Build in Construction

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 bonding needs. Project Delivery Methods There are three approaches to executing and delivering construction projects: Construction management at risk (CMAR), also known as construction manager at risk Design-bid-build (DBB), also known as design-tender Design-build (DB), also known as design-construct, or single-source responsibility Construction Management at Risk The CMAR approach involves the project owner teaming up with the chosen general contractor at the beginning of the design process. The synergy between the project owner and general contractor (referred to as the construction manager) during the design process improves the accuracy of cost estimates, gives the contractor a good understanding of the project scope and details, and allows time for trust to develop between the two parties prior to starting construction. In this manner, CMAR smooths the transition from design to construction. In most cases, the selection of the CM is based on qualifications, with price as the secondary consideration. Though subcontractors usually are chosen through competitive bidding, the CM commits to delivering...

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Autonomous Construction Equipment Trends

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 bonding needs. What is Autonomous Construction Equipment? Driverless vehicles are becoming more prevalent as the technology develops, though fully autonomous vehicles are probably still a couple of years away from being a common sight on the nation’s highways. History has shown that heavy equipment—tractors, bulldozers, dump trucks, cranes, excavators, and the like, tends to be about a decade behind the automotive industry in terms of technology adoption. But autonomous construction equipment is likely the future. Examples from the Mining Industry Experiments with autonomous mining equipment pointed the way for the development of autonomous construction equipment. If autonomous dump trucks could move without a driver, there was no reason to think that construction operations couldn’t use them to a similar advantage in terms of fuel and time efficiency. The use of such vehicles, controlled remotely by an operator much as drones are, maximizes precision and optimizes equipment utilization, while eliminating the possibility of personal injury to human drivers. From Semiautonomous to Fully...

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