Bryan Ward & Elmore (BWEInsurance.com) continues to demonstrate the professional expertise in designing a comprehensive surety program for our clients. Through our staff and association with financially sound surety underwriting markets, we are ready to assist you in your surety bonding needs.

We would be happy to provide your firm a Contract Bond Review, including a comparative "financial benchmark" analysis of your firm, and determine whether you have secured the best Bond Line Program and Best Rate available in the marketplace.

Surety is the act of a person or organization offering themselves liable for another s debts, defaults, or obligations. It is a pledge or promise to secure or guarantee against loss, damage, or default.

A Contract Bond Review entails a review of your firm s financial information, such as Income Statement and Balance Sheet, along with a review of your firm s existing surety and banking relationships, a review of your current Bond Line Program and Rate, and your firm history and type of contract work completed in the past. "Financial Benchmarking" is a process of comparative financial analysis, in which your firm s financial condition is compared to several financial models that incorporate target financial ratios established by the contract surety industry. This process of "financial benchmarking" enables the management team of a construction firm to view the significant financial factors and ratios which are used by surety underwriters in developing a Contract Bond Program for a construction firm. We invite your consideration of a Contract Bond Review and a "Financial Benchmarking" analysis conducted by one of our agency surety experts.

A surety underwriter will evaluate the capital, character, & capacity of a contractor and make a determination on the ability of a contractor to perform work in their chosen contracting discipline. If a Surety determines that a contractor is qualified to do the work, the Surety will agree to execute and issue Surety Bonds, for the benefit of an obligee (Public or Private Owner), which will guarantee the contractors faithful performance and/or payments of a construction project.

In lieu of a 10% cash deposit of the construction bid provided to an owner, the Surety will issue a Bid Bond. A cash deposit is subject to full or partial forfeiture if the low bidding contractor fails to execute the contract or fails to provide the necessary Performance and/or Payment Bonds. It is a customary practice by a Surety, and quite common, to waive any premium cost to a contractor in the execution of a Bid Bond.

Most Public sector owners and many Private sector owners will require a contractor to furnish a Bid Bond or a 10% cash deposit to accompany a construction bid.

It is a customary practice with any owner who has requested a bid bond or 10% cash deposit, to require a bidding contractor to furnish a Performance and/or Payment Bond within 30 days of the contract award date or prior to any contract payment.

A Performance Bond is issued by a Surety and provides a Non-cancelable commitment by the Surety to an owner of a construction project (Obligee), guaranteeing that the contractor will complete the construction project on time, and in accordance with the contractual terms and conditions specified in the construction contract. A Payment Bond issued by a Surety provides a guarantee to an owner that all subcontractors, material suppliers, and construction employees will be paid and that the construction project is free of any future financial obligations.

The cost of these bonds is dependent on several factors, but typically is in a range of 1-4% of the contracted construction price. It is customary that the Payment Bond is provided at no additional cost. A Payment Bond is normally not requested separately. If required as a separate bond, a Payment Bond usually costs approximately 50% of a Performance and Payment Bond premium.

The discipline of Surety underwriting in determining which contractors are qualified for surety bonding is a very deliberate and detailed review process. Not all contractors are able to secure a surety bonding program, based upon such factors as a review of a contractor s current financial condition, their past record of contracting performance, their current banking and surety underwriting relationship, existing perpetuation and continuity plans, etc. The primary objective of a Surety underwriter is to determine the capability of a contractor (Principal) to complete a project in accordance with the terms and conditions of the construction project as required by the owner (Obligee).

This is where a qualified, professional surety bonding agent/broker earns their livelihood. As previously indicated, the objective of a surety underwriter is understood by a surety agent/broker. It is the mission of a competent surety agent/broker to secure in the marketplace the right partner (Surety), that understands the capabilities of the construction contractor which is seeking a surety relationship. Normally a competent surety agent/broker will be able to secure a surety program for a qualified construction contractor.

Usually a Surety would like to examine 3 years of financial statements as prepared by a CPA. In conjunction with a review of the financial statements, a surety will need to examine "Work in Progress Schedules" and details of "Accounts Payables and Receivables," which are tied to the financial statements. A competent construction CPA firm is very familiar with these requirements. Additionally, a contractor will provide a completed questionnaire, which details the history of the firm, banking relationships, and type work completed in the past. The Professional surety agent/broker understands this process and will assist the contractor in gathering this vital information, prior to submitting to a Surety company.

After a review of the contractor s application, completed questionnaire and financial statements, a surety will use various guidelines to determine a suitable surety program for the qualified contractor. The surety offer of a Bond Line and Rate will be dependent upon a review of the construction firm financial liquidity, leverage, efficiency, and profitability ratios, as well as the past performance and reputation of the construction firm in the marketplace. A Professional surety agent/broker will assist the contractor in qualifying for the best Bond Line and Rate that can be secured in the marketplace.