To get bonding these days, construction companies need to prove to sureties that they are well run and know how to control risk. In Dennis Stejskal’s blog post on August 8, he provided five ways to position your company to a surety in order to get adequate bonding. But what’s the best way to manage your surety relationship long-term?
I posed that question recently to Jane Radford, vice president and chief financial officer of Hamel Builders Inc., a general contractor located in Elkridge, Maryland. Her answer: Develop a true partnership with your surety.
Like many construction financial managers, Jane has seen greater scrutiny from bonding companies after the recession took its toll in the form of company failures and missteps. As a result, sureties want to be more integrated into a contractor’s decision making and are requiring new levels of reporting.
“A lot of people tend to be very guarded with their sureties,” Jane told me. “They only provide asked and answered kinds of information. We go beyond that because we really want our surety to be involved in our business so that they feel comfortable when we ask for additional capacity.”
Hamel Builders stays in touch with their bonding company at least monthly and provides financial information quarterly. But it doesn’t end there. “Anytime we feel we have information to share, we share it immediately,” Jane said, adding that they also regularly invite their surety representatives to the job site to see how a project is progressing. This is typical of Hamel Builder’s open-book team approach to business. In return, their surety often offers helpful advice to improve Hamel Builders risk profile.
During our conversation I also asked Jane if she had any advice for other contractors looking for a surety. She stressed that it’s important for a contractor to feel comfortable with what the surety provides. “They (the surety) are going to do background checks on you,” she said. “Make sure you do a background check on them.”
Understanding a surety’s business philosophy is also key to building a business relationship that will help reduce your risk. As Jane summarized, “Any problem can be solved as long as you partner with the right people.”
About the Author
Deb Carpenter-Beck is a writer and marketer with more than 25 years of experience in the construction and real estate industries. She often writes about technology and best practices and is passionate about helping contractors and real estate professionals achieve their business goals. You can follow her on Twitter @SageDebCB.
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