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Contractor Tools
San Francisco Edition
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Now that Spring is starting, we anxiously anticipate many new opportunities to work with local contractors and assist them in gaining access to surety bonding. Our mission and dedication to facilitating this important facet of contracting with the City and County of San Francisco is but one component in building a strong, viable contracting community that is inclusive of local contractors from a wide spectrum of sophistication, disciplines and social backgrounds. We have enhanced our scope of work by adding
Contractor Development services. We are excited about a host of events, informative seminars, intensive one-on-one consultation and educational opportunities designed to broaden participating contractors' knowledge base and expand their access to available resources.
In This Issue...
There is a Contractor Profile of Clark Construction, a legal overview of Public Works Contracts, information about San Francisco's Contract Monitoring Division, and steps on How to Obtain a Bond and Avoid Claims on Construction Projects. Read on and enjoy.
Kindly,
City & County of San Francisco Surety Bond & Finance Team
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Contractor Profile: Clark Construction
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Spotlight:
An Interview with Steve Dell'Orto,
Regional Acquisition Officer and
Senior Vice Presi
dent for the Western Region & Marivic Bamba Chennault,
D
irector of Government, Community Affairs and Small Business Development of
Clark Construction
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Steve Dell'Orto |
As a building and civil construction firm originally founded in 1906 by a small local road excavator, Clark Construction has remained committed to its community roots while becoming the Bay Area's 4
th
largest contractor and growing to a national scope that encompasses complex projects
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Marivic Bamba Chennault |
ranging in fields from aviation, medical and government to mass transit, sports, and mining. The company has earned over 1,400 awards for quality, craftsmanship, sustainability, and safety. For this article,
Contractor Tools
spoke with Clark Construction's Regional Acquisition Officer and Senior Vice President for the Western Region, Steve Dell'Orto, and Director of Government, Community Affairs and Small Business Development, Marivic Bamba Chennault, to learn more about the company's ongoing commitment to working with small and minority-owned contractors and how this is implemented in their current Bay Area projects.
Contractor Tools:
What projects is Clark Construction currently working on in the San Francisco Bay Area?
Steve Dell'Orto:
We have numerous projects going on simultaneously, including Salesforce Tower, Park Tower, Golden State Warrior facility, Mission Bay, Palo Alto Children's Hospital, Highland Hospital Acute Tower Replacement in Oakland, New Adult Stanford Hospital, Van Ness Apartment Complex and the
Office of Chief Medical Examiner project, to name a few.
Contractor Tools:
Can you tell us more about the Office of Chief Medical Examiner (OCME) project?
SD:
The City of San Francisco initiated a very forward-thinking, bond-funded, multi-year project to upgrade the City's emergency response system and related resources. The Office of the Chief Medical Examiner (OCME) project is located in the Bayview neighborhood and will include a variety of first responder facilities, such as a forensics crime lab, medical complex, field investigations, morgue, criminal justice system staff, and administrative support offices. Our company was chosen to partner with the San Francisco Public Works and KMD Architects in the construction of this two-story, 46,000 square foot building.
Contractor Tools:
What proactive initiatives has Clark incorporated into the OCME project? How is Clark's OCME project engaging local residents and small businesses?
Marivic Bamba Chennault:
Clark Construction's overall vision and philosophy is one of community inclusion - we want to not just build projects within communities but build community through our projects. As a company, we've created our own voluntary set-asides that allow us to bring in smaller contractors for painting, landscaping, drywall, flooring, site utilities, and other portions of the larger project.
With strong support from the City, we collaborated as a team with the San Francisco Public Works Department, Contract Monitoring Division, Merriwether & Williams Insurance Services and the San Francisco Public Utilities Commission Contractor's Assistance Center in the Bayview neighborhood to develop a "Comprehensive Community Engagement Plan," incorporating multiple outreach and development methods. These included several well-attended "kick off events" to provide advance notice to Bayview residents of upcoming opportunities; networking and pre-bid sessions with contractors; and one-on-one support to help local businesses meet all the project requirements.
For the OCME project, Clark Construction provided our input to the City on pre-construction and budgeting planning so that we could help bring in diverse subcontractors. Thirty percent of the project team is made up of San Francisco residents, and over 30 small, local businesses are participating, with over half of these coming from the Bayview community. We exceeded our original inclusion goal on this project by 150%, primarily by being proactive in our collaborative outreach and support efforts, and over 30 participating contractors went on to become prime (first tier) contractors.
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Clark Construction OCME Project |
Contractor Tools:
Was bonding required on the OCME project? How was Clark able to assist small local business to obtain bonding?
MBC:
Yes, bonding was a requirement for participation in the OCME project. The collaborative team worked to identify local business enterprises and determine their bonding capacity. The Staff at Merriwether & Williams Insurance Services were instrumental in our being able to offer a "Bonding and Certification Assistance Day" to give local contractors individual assistance, including getting help with their businesses' financial recordkeeping, in order for them to secure bonding. Clark Construction was flexible in putting some contract awards on hold to allow these contractors time to get bonded.
Contractor Tools:
Will Clark continue to implement the initiatives when working on other San Francisco Bay Area projects?
SD:
Absolutely, Clark Construction's commitment to inclusivity was strong prior to the OCME project and continues with our other projects. For example, Clark Construction is part of a strategic partnership program, launched in 2013, which has already provided free training to three classes of graduates, helping them to build their business capacity. Several of these graduates were able to participate in the OCME project, have since grown their capacity, and are now able to employ more local contractors. Providing small contractors with education and support in meeting contracting and bonding requirements creates a larger pool of skilled professionals. Once they gain experience and build their capacity, they provide opportunities for other small contractors, and everyone benefits. When we forge collaborative relationships, these synergistic activities create win-win situations which build community and strengthen our local economy.
Contractors interested in learning more about opportunities with Clark Construction can visit the company's website:
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About the Contractor Assistance Center
San Francisco
is poised to invest billions of dollars into the City's aging public infrastructure - water, sewer, roads, and transit systems. Local and small businesses will need tools and resources to adequately get access to, compete for, and perform on these contracting opportunities.
In the Center,
professional service firms, construction companies, vendors, and suppliers now have a unique and free resource that supports the City's economic vitality and strengthens its neighborhoods, commercial corridors, and the San Francisco workforce.
Phone: (415) 467-1040
Fax: (415) 467-1041
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Free Workshop
Join Us at Our Monthly Bonding 101 Workshop
Each Month we hold a Bonding 101 Seminar on the 3rd Wednesday of every month!
Join us
April 19, 2017
10:00am - Noon
Location
Contract Monitoring Division
(CMD)
30 Van Ness Avenue, 2nd Floor, Suite 200, San Francisco, CA 94102
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The Surety Bond Program is looking forward to planning and offering seminars on the following topics:
- Accounting 101
- Estimating
- Safety - OSHA Certification
Please let us know of other seminars that you would like to see by contacting us directly at [email protected]
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A Contractor's Guide to Understanding Public Works Contracts
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Spotlight: An Interview with Cathleen Curl, Esq. of Manos & Curl Law Offices - Part 1 (Prime Contractors)
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Cathleen Curl, Construction Attorney
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Many contractors feel overwhelmed by the complexity of public contracts, and just choose to sign them without paying much attention to details that can later come back to haunt them. Yet, with some understanding of what to look for, contractors can not only protect themselves, but also can sometimes negotiate more favorable terms. Contractor Tools spoke with Attorney Cathleen Curl, who has specialized in Construction Law for over 25 years. A partner in the law firm Manos & Curl, LLP, Cathleen took time out of her busy schedule to provide some expert guidance on several of the most important contract features and clauses for contractors to become familiar with when bidding on public works projects. In Part 1 of this interview, Cathleen focuses on prime or general contractors and in Part 2 (which will be featured in the next newsletter), she addresses subcontractors.
Contractor Tools: Can you start by giving us an idea of what mistakes prime contractors make in reviewing contracts and what a general contractor should review in contract documents?
Cathleen Curl: In my experience, one of the biggest mistakes that most prime contractors make is that they only look at a few contract provisions - the main one being how much they are going to get paid - while overlooking a number of other very important contract terms. Contractors need to become familiar and comfortable with how contracts are worded and typical provisions so that they can understand what is expected of them and make sure that they can meet those requirements.
Also, prime contractors often assume that they cannot change any of the contract terms once they receive it from the owner. While they may not have a lot of bargaining power, they do have some, and it is perfectly legal to make changes to a prime contract if both sides agree. Understanding this can help general contractors avoid agreeing to terms that they cannot actually fulfill, when instead, they can sometimes request practical revisions that will allow them to fulfill all the requirements.
Another suggestion is to make sure that the contract language never indemnifies the architect, engineer, or similar design professional on a project. I see this happen all too often and if there are problems with the plans that get drawn, which can happen, then the general contractor has no recourse if he or she has agreed to indemnify the design professionals. It's okay to include language that indemnifies the City and County of San Francisco, their employees, officers and representatives, but do not include any design professionals.
Contractor Tools: What are some of the troublesome contract clauses for prime contractors working with the City and County of San Francisco?
Cathleen Curl: From what I have seen, the top most-overlooked contract provisions are the payment terms, the indemnity clause, the claims procedure and the minority business inclusion clause.
I am always surprised at how many prime contractors do not look at the payments terms, which define when they are going to get paid. Understanding the terms of payment is important, because this determines how often they will get paid, what requirements must be fulfilled in order for them to get paid, and how long they will have to wait for final payment.
The indemnity clause is another frequently ignored but very important contract provision, as it defines the types and amounts of insurance coverage that the contractor is required to carry and who exactly must be covered by the insurance policy.
Another often overlooked clause is the claims procedure, also called an alternative dispute resolution process, which spells out the process through which disagreements are to be worked out or negotiated, should they arise. This explains whether arbitration or meditation is required. Many people don't understand the difference between the two. I think mediation is a great idea, because it means that before anyone tries to sue each other, they sit down together and try to settle the issue.
Another contract provision for public works projects that can be challenging for prime contractors is the minority contractor inclusion clause. General contractors should make the Human Rights Commission their friend before entering into City and County contracts. They need to take the time learn about and understand how to proactively implement the inclusion requirements and to make sure that the subcontractors they hire will meet the qualifications. The City has also been cracking down on "paper contractors" - those who are not really local, but just maintain a local post office box. It's so important to pay attention to all of these details.
In general, don't assume that because your bid made exclusions, these will be automatically included by the client in the prime contract - they may not be included at all, unless you request to attach a copy of your bid as an appendix to the contract. Sometimes, the client will incorporate some but not all of your exclusions, so you need to cross-check to ensure that all your exclusions have been incorporated into the contract.
Again, there are many reasons why it makes sense to have an attorney or experienced professional read over your contracts, unless and until you or a member of your staff have the necessary knowledge about what to look for and how to negotiate contract clauses.
Contractor Tools: Why do contractors overlook some of the most important parts of a contract - does the language intimidate them? Is there a lack of education and understanding?
Cathleen Curl: Yes, unfortunately, most contractors rely on "trial by fire," meaning that they only learn what to look for in a contract after they have had already experienced a problem with that provision. The important details are spelled out in the contract, but I don't see a lot of contractors paying attention to those areas. It's the little things that you didn't even know you were supposed to do that are the ones that can hurt you. It's much better to understand contract provisions ahead of time, so that you can avoid experiencing trouble in the first place. I teach a class through the San Francisco and Peninsula Builder's Exchange on what to look for in contracts and what can get you in to trouble. Trade and professional associations usually offer similar classes. So the information, education and guidance are available.
Contractor Tools: What actions would you recommend for a prime contractor to do before entering into a contract with the City and County of San Francisco?
Cathleen Curl: Besides taking classes to educate themselves, I always say that contractors should have a good attorney, a good C.P.A., and a good insurance representative to advise them on projects. In addition, specific to City and County contracts:
First, have someone experienced review the contract. If you don't want to read a 70-page contract, have an attorney or experienced professional review the contract provisions. As a Construction Attorney, I regularly review contracts for my clients. It's money well spent and some of my clients ask me ahead of time what my charge will be and include it as part of their bid - that is not always possible, but for some projects it is. Some public agencies' projects can be considerably more challenging to work on than other projects, so it's extremely important to know what you are getting into beforehand.
Second, contractors who work on public projects need to make sure that they have sufficient capital to complete the scope of work defined in the contract. There can be a lot of delays in getting paid on many public works projects, so plan ahead and if you're taking on a project that is financially a bit of a stretch, then establish a line of credit ahead of time so that you can be prepared to meet payroll if the project payments are delayed. A good Certified Public Accountant can review your financials to help make sure that you are in a good position to take on specific new projects.
Third, have a good insurance representative review the insurance requirements of any new contract to ensure that you have the necessary insurance coverage. I have had clients that did not find out until after signing a contract that they did not have adequate insurance coverage to meet the contract requirements - this can cause stressful delays. Most public works contracts have requirements that go beyond General Liability and Commercial insurance. So I recommend that before contractors sign a contract, they make a copy of the insurance requirements detailed in the contract and send them to their insurance broker to make sure that their current insurance coverage meets the contract requirements.
Contractor Tools: This is a great reminder to general contractors to avail themselves of the information, expertise and resources that are out there. It makes sense to take the time to get professional guidance before signing a contract, rather than going through the stress of having to try to resolve issues that might come up after a contract has already been signed.
Contractors interested in connecting with Cathleen to learn more about her upcoming classes on understanding contracts or to find out more about working with a Construction Attorney can reach her at: Cathleen M. Curl, Esq., Manos & Curl LLP, 700 El Camino Real, Suite 200, Millbrae, CA 94030, telephone: 650-871-5955
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An Introduction to the City and County of San Francisco's Contract Monitoring Division: An Important Resource for Bay Area Businesses
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Contracts are the key to doing business with the City and County of San Francisco. With public works projects always under way and a broad spectrum of products and services needed related to those, the City and County of San Francisco created the Contract Monitoring Division (CMD) to help ensure that small, local contractors and businesses are given fair opportunities to be awarded contracts with the City and County of San Francisco. Contractor Tools interviewed the agency to learn more about what they do and what resources they offer contractors.
Contractor Tools: What is the Contract Monitoring Division (CMD) - why does it exist?
Contract Monitoring Division
(CMD):
The Contract Monitoring Division (CMD) is the government agency within the City and County of San Francisco that implements and enforces the Chapter 12B Equal Benefits Ordinance and the Chapter 14B Local Business Enterprise Ordinance. These ordinances were adopted by the Mayor and Board of Supervisors to protect the public interest in equality throughout the City and County of San Francisco's governmental contracting process.
Contractor Tools: What is the mission of CMD?
CMD:
Our mission is to provide expert technical assistance to businesses that wish to contract with the City. CMD is committed to
ensuring this mandate is accomplished fairly, effectively and efficiently.
Contractor Tools: What programs does CMD provide for local businesses and contractors?
CMD:
We offer three regular workshops as part of a "Wednesday Workshop Series." These are offered the first three Wednesdays of each month at 10 am at 30 Van Ness, Suite 200 in San Francisco. The workshop topics are:
1
st
Wednesday:
How to Certify your Business with the San Francisco Contracting Monitoring Division as an Local Business Enterprise (LBE), PUC-Local Business Enterprise (PUC-LBE) or Non-Profit Entity (NPE)
2
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Wednesday: How to
Bid on City Contracts
3
rd
Wednesday:
Overview of the San Francisco Surety Bond Program for LBE, PUC-LBE and NPE Certified Construction Firms
Contractor Tools: What is Chapter 12B Equal Benefits program? What is its purpose?
CMD:
Chapter 12B is known as "Equal Pay for Equal Work." In employment situations, fringe benefits can amount to 30% of an employee's total compensation, yet until recently, employees could only extend those
benefits to a spouse and children. Employees with a registered same-sex or opposite-sex domestic partner were on their own in obtaining an insurance plan for their loved ones. The only option available in such a case was often an expensive and limited individual plan for the employee's domestic partner. Even benefits without cost, for example, bereavement leave, were unavailable to employees with domestic partners.On November 4, 1996, the San Francisco Board of Supervisors passed a law to address one aspect of this discrimination, and Mayor Willie L. Brown Jr. signed the law on December 8. Known as the "Equal Benefits Ordinance," the law requires businesses that contract with the City and County of San Francisco to eliminate discrimination in the provision of employment-based benefits for employees with registered domestic partners and employees with spouses. Although subcontractors are not required to comply, they are encouraged to provide benefits equally to all employees.
Domestic partners are defined as same-sex and opposite-sex couples who have registered with a state or local government domestic partner registry. Since 1997, more than 18,800 businesses have achieved compliance with the San Francisco Equal Benefits Ordinance. These vendors employ a pool of over 5.6 million people nationwide. The advantages of the Chapter 12B Equal Benefits Ordinance extend beyond this group to the uncounted dependents who participate in their domestic partner's benefits.
The CMD's 12B Equal Benefits Unit is charged with implementing and enforcing this groundbreaking ordinance. It was the first Equal Benefits Ordinance in the United States, and nineteen other jurisdictions subsequently adopted Equal Benefits Ordinances.
Contractor Tools: What is the 14B LBE Ordinance and what is its purpose?
CMD:
The 14B LBE Ordinance is known as "Certification and Compliance," and has two core functions:
a)
Certifying contractors and businesses that meet the ordinance's requirements, which is intended to improve the ability of certified firms to compete effectively in the award of City Contracts. Although certification is not required for bidding on City contracts, certified firms can compete more effectively on City contracts because the Contract Compliance Unit (CCO) of the Contract Monitoring Division sets requirements on most City contracts, these requirements are met by listing only LBE certified firms.
b)
Providing CMD-certified firms assistance through a series of legislatively defined programs. In particular, the LBE Ordinance provides CMD-certified businesses with:
- Bid Discounts/Rating Bonus for CMD certified LBE Prime & LBE Joint Venture
- LBE Subcontracting Opportunities
- Set Aside Contracts for participation by only Micro-LBE certified firms
- Bonding and Financial Assistance
- Mentor-Protégé Program
Additionally, as part of this ordinance, our Local Business Enterprise Contract Compliance Team:
- Monitors the solicitation and selection process for fairness and transparency
- Sets LBE participation goals for Chapter 14B covered contracts
- Assesses bidder and proposer eligibility for LBE bid discounts and ratings bonus
- Determines pre/post award compliance with Chapter 14B
- Investigates, mediates and resolves 14B-related complaints and disputes, including prompt payment issues; imposes sanctions for non-compliance as necessary
- Tracks and reports Departmental LBE participation
Contractor Tools: How does a business go about getting certified as "LBE" or "Local Business Enterprise" and what are the other types of certifications available to qualifying businesses?
CMD: We offer the following types of Certification:
1.
Local Business Enterprise
("LBE") Certification: LBE certification is available only to businesses with a primary place of business in San Francisco.
2.
PUC Local Business Enterprise ("PUC-LBE") Certification:
PUC-LBE certification is available only to licensed contractors, construction materials suppliers and truckers/haulers with a primary place of business outside of San Francisco but within the "SFPUC Water System Service Area" and seeking to participate in PUC Hetch Hetchy projects.
3.
Non-Profit Entity ("NPE") Certification:
NPE certification is available to non-profit entities with a primary place of business in San Francisco.
4.
Small Business Administration ("SBA") Certification:
SBA certification is available to businesses who have exceed economic thresholds set for LBEs with a primary place of business in San Francisco
Contractor Tools: It sounds like there are a number of ways to get certified. What is the 14B LBE Ordinance - CMD Mentor Protégé Program and how does it work?
CMD:
Our Mentor-Protégé Program (MPP) is designed to encourage and motivate prime contractors to assist CMD certified Micro-Local Business Enterprise (LBE) businesses and contractors and enhance their capability of performing successfully on City and County of San Francisco contracts and subcontracts. The goal is to increase the overall number of LBEs receiving City and County contract awards, resulting from mentorship and refined business practices.
The City and County of San Francisco's Mentor Protégé Program provides a platform for successful prime companies to assist CMD Micro-LBE Certified firms in any of the following areas:
- Organizational/Structural Needs
- Leadership Development Needs
- Financial/Business Infrastructure Needs
- Insurance/Bonding Needs
- Networking/Business Community Engagement Needs
Contractor Tools: How long has the CMD Mentor Protégé Program (MPP) been in existence?
CMD:
In response to a call from Mayor Lee for all City Departments to procure more of their goods and services from local firms, in 2014, the CMD created a workgroup of small business owners and City staff to develop a two-year pilot Mentor Protégé Program,focusing on increasing the capacity of small businesses to be responsive bidders and subcontractors on City Contracts. Mentors and Protégés began working together in January 2016 and the program has been very successful.
Contractor Tools: Can you share successes of the CMD Mentor Protégé Program (MPP)?
CMD:
One of the MPP mentor/protégé teams created a $1 Million-plus joint venture (not a program requirement) to bid on City contracts, which has also allowed the Mentor to see the Protégé at work and conduct better skills assessment. Another Protégé is receiving mentorship on conducting more targeted marketing by better defining his business' mission statement, values, and structure. Finally, a protégé in the construction industry is learning from his mentor how to submit bids that are within his capacity, while helping him look for additional resources to increase that capacity.
Contractor Tools: How can contractors and other small and local businesses learn more about the certification program and other support services offered by the Contracts Monitoring Division?
CMD:
We welcome any business owners who are interested in learning more- they can:
Visit our website:
Sfgov.org/cmd or
Walk in to our office to meet with our staff: Monday - Friday 9 am - 5 pm
Call our office to speak with us: 415-581-2310
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Part 2 of a 2-Part Conversation: Obtaining Bonding and Avoiding Claims
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Spotlight: An Interview with
Greg McCartney of James E. McGovern, Inc.
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Greg McCartney |
In our prior newsletter, as Part 1 of this series, The Basics and Benefits of Contractor Bonding, we explored what bonding is and how contractors can benefit from obtaining bonding. In this issue, in Part 2, Obtaining Bonding and Avoiding Claims, we cover how to obtain or increase bonding and avoid bond claims.
Previously, we discussed that bonding is required by law on public works projects and that it helps protect all parties involved, including the project owners, contractors, subcontractors and suppliers, and local communities. Bonds help ensure that contract work is completed as specified, in a professional manner, and that suppliers of materials and labor are paid as agreed. Contractors who are bonded can benefit from becoming eligible to bid on construction projects for government and public agencies, which can potentially increase their work opportunities and overall business success and profit.
Many contractors who have never been bonded can secure bonding with the help of a local bonding assistance program and by working with an insurance agent specializing in construction bonding. Along with getting assistance with organizing their business and preparing related financial documents, contractors can learn how to avoid having any bond claims, thereby increasing their professional credibility and the likelihood of being awarded additional contracts.
To learn more about obtaining bonding and avoiding bond claims, Contractor Tools spoke with Greg McCartney, of insurance agency James E. McGovern, Inc. With over 47 years of experience in construction bonding, Greg has expertise in all aspects of the bonding process and how it can help contractors succeed in the public sector.
Contractor Tools:
Greg, can you tell us how a contractor obtains bonding?
Greg McCartney:
Bonds are very small part of the insurance industry, so most insurance agents do not have much if any experience with bonds. The first step is to talk to a competent insurance agent who specializes in construction bonds or to connect with a local bond assistance program. The insurance bonding agent can help the contractor set up the company and the necessary business documentation in a way that is acceptable to the insurance companies who issue bonds. Bond issuers want to see that the contractor has the know-how to complete the project being bid on, and that the contractor's business is run in a professional manner, including having the necessary capital or financial resources and documentation.
Contractor Tools:
So, getting some expert advice and then assistance with organizing one's business affairs sounds like the first step toward bonding. Are there any costs associated with securing bonding?
Greg McCartney:
Yes, bond premiums are a direct cost and they should be included in the bid price. The major indirect costs are for having a Certified Public Accountant (CPA) prepare financial statements. Contractors who use bonds regularly amortize the CPA costs over several jobs and they are generally competing with contractors who have similar costs. Bond assistance programs can sometimes also be of help if you don't have all of the resources.
Contractor Tools:
Oh, so some of the costs can be passed through in the contractor's bid price, others can be distributed over several jobs, and financial assistance is sometimes available from bonding programs. Any suggestions for contractors looking to get their first bond?
Greg McCartney:
Getting and maintaining a bonding relationship is not difficult. I'm always happy to take calls from contractors who have questions. One key point is to run your construction company in a business-like manner. You cannot use the construction company as the family bank. Bonding companies also look carefully at personal debt, especially high credit card balances. The City and County of San Francisco, the Small Business Association and other government agencies have bond assistance programs that can get you started on the right track.
Contractor Tools:
Do you have any suggestions for contractors who are already bonded but are now looking to increase their bonding capacity?
Greg McCartney:
Many bonding assistance programs can help you increase your bonding capacity and bid on larger jobs if you don't have all the resources. Keep in mind that bond underwriters try to match a contractor's bond with the capability of the contractor. Underwriters expect contractors to increase capital management and labor in proportion to their capacity. A good bonding insurance agent will help the contractor plan the growth of the construction company. Most agents and bonding companies look forward to watching their contractor clients grow - it just needs to be done in a reasonable, business-like manner.
Contractor Tools:
In other words, contractors should avoid bidding on projects that they cannot successfully complete. It sounds like taking a slow and steady approach to growth works best - is this also one way that contractors can avoid bond claims?
Greg McCartney:
Yes, professional contractors rarely cause bond claims. Successful contractors are careful when venturing into new areas of construction. If you get into a new type of work, start with a smaller job before taking on a large, complex project outside of your company's comfort zone.
Contractor Tools:
It's great to know that bonding programs and surety agents are also there as resources to help contractors learn to build their businesses in a sustainable and realistic manner. Are there any economic trends on the horizon that construction contractors should be watchful for?
Greg McCartney:
When a recession hits, most businesses can expect lower sales and lower prices. The key is to be prepared to weather the storm. A contractor must maintain enough liquidity to save the business. Run your business responsibly. Installment debt is the big killer, so if you don't need it, don't buy it.
Contractor Tools:
That's good advice for all of us, but particularly for small business owners. Is there any other information that is important for contractors to understand about bonding?
Greg McCartney:
Public sector work can be profitable, and you get to use high-quality materials and can create a better working environment for yourself and your employees. Start with a no-cost individualized assessment to learn what you need to do to get bonded. Make a quick call to me, or another competent insurance agent specializing in construction bonds, or contact your local bonding assistance program.
Contractor Tools
:
That's great advice. Even if you're not sure if you can get bonding, or your business practices are not up to these standards yet, by reaching out, you can get the guidance you need to become ready for bonding.
To discuss your individual bonding questions, you can reach Greg McCartney of James E. McGovern, Inc., at [email protected] or 650-593-8216. Additional information is also available from Merriwether & Williams Insurance Services, Inc., at (415) 986-3999 .
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