Rancho Mesa's Alyssa Burley and Surety Relationship Executive Anne Wright discuss why bonded projects are better performers than non-bonded projects.

Show Notes: Subscribe to Rancho Mesa's Newsletter.

Director/Host: Alyssa Burley

Guest: Anne Wright

Editor/Producer: Megan Lockhart

Music: "Home" by JHS Pedals, “News Room News” by Spence

© Copyright 2023. Rancho Mesa Insurance Services, Inc. All rights reserved.

Transcript

Alyssa Burley: Hi, this is Alyssa Burley with Rancho Mesa's Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa News. Brought to you by our Safety and Risk Management Network, StudioOne. Welcome back, everyone. My guest is Anne Wright, Surety Relationship Executive with Rancho Mesa. Today, we're going to talk about bonded projects being better performers than non bonded projects. Anne welcome to the show.

Anne Wright: Thanks again so much for having me.

AB: Of course. So the goal of the surety in any relationship is to ensure that the bonded job is completed successfully, is profitable for their client and is without claims. It seems like any project owner would be wise to require their contractors to be bonded to ensure the project is completed according to the contract. So in fact, according to a survey of owners and developers, quote, A bonded projects are more likely to be completed on time or ahead of schedule, end quote. So if we assume a bonded projects will perform better, what is it that the surety is doing that may contribute to a positive outcome for the project?

AW: Well, it's a joint effort. Obviously, when we established a contractor for surety credit with their respective surety, there are certain expectations of what would be a routine request. So if they go outside of the routine, if they get into something that's larger, which happens very often, especially these days as prices go up, if they are working for someone outside of their normal list of clients, it's a new owner or a general contractor to them. We're looking at details in the contract that might then lead us to ask more questions about a job breakdown. Do they have the labor forces available to mesh with their existing work? How is this going to fit in with what they're already doing? There's a little more in-depth question and back and forth between the surety of the agent and the client. So we understand what they're looking at. And you know, every now and then something pops up and a client will actually tell us that "Thanks, I didn't think of that." So we're trying to cover all the bases.

AB: Yeah. And especially on projects that are outside of the contractors, normal size and scope, it's great to have a surety asking those additional questions that maybe the contractor just didn't even ask themselves when they were looking at the contract. So will the surety review contracts for our clients?

AW: We do have some sureties that will offer that service. They have legal counsel on board that will take a look at those. If it's a public owner, obviously there's not going to be much change to any contracts, but it really comes into play when it's a subcontract or a private job. So, yes, we do have some legal review capabilities from some of our sureties.

AB: Okay. So that's a benefit to getting a bond that I hadn't thought about before.

AW: Right now, other services offered.

AB: Yeah. So are there any other kind of unconventional benefits to getting a bond on a project?

AW: With respect to private projects. The surety is going to want to verify that the financing is in place. That's probably a key item to discuss here. If you're working for a public owner, obviously we know they've got the public funds.

AB: Right.

AW: What their where they're going to go. But on a private job, you know, is their firm financing in place? Are the line items in a contractor's contract covered by that construction loan? So we will ask those questions, make sure that they have the correct preliminary information. So if they need to pursue any actions against the the lender, then we all know what's what's going on.

AB: Yeah, that's pretty important. And contractors want to know the funds are there so they're going to get paid and.

AW: Factor in the surety.

AB: Yes. So we know that the surety may ask a bunch of questions about the project to ensure everything looks like it's on the up and up. They may review the contract and ensure there are funds so the contractor gets paid. Those are all really good indicators that the project will be successful. Will you walk us through the connection between all of these activities that the surety is doing and how that can increase the likelihood that the project won't have any significant problems?

AW: Sure. Everything we've discussed here suggests that, you know, it's a working relationship between the the surety, the agent and the contractor to make sure things are in order to, you know, have them successfully complete the project. And again, goal being, that they make some money at it. So that's all well and good. Most of the time our contractors are going to have their personal indemnity on the line to the surety, not just the business indemnity. So if you just think of the the situation there, if your personal signature is on the line, you're going to pay a little more attention to what you're doing on that bonded job. So that is a key for, I think, what makes the sureties performance markers better on bonded jobs than unbonded jobs.

AB: Yeah, and that would certainly be a motivator for anyone who has their personal assets at stake to make sure that you're completing the project on time and as it is described in the contract. So Anne if listeners have questions about their surety program, what's the best way to get in touch with you?

AW: I can be reached at awright@ranchomesa.com or call me at 619-486-6570.

AB: All right. Well, Ann, thank you so much for joining me in StudioOne.

AW: My pleasure. Thank you.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode produced by StudioOne. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.