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Surety Bonds 101 The Basics of Bonding What is Surety Bonding? Principal Obligee Surety Types of Surety Bonds Bid Bond Performance Bond Payment Bond Types of Surety Bonds Bid Bond Performance Bond Payment Bond Types of Surety Bonds Bid Bond Performance Bond Payment Bond Prequalification Capital Capacity Character Prequalification Capital Capacity Character Financial statements Resumes Reputation Working capital Contingency plan Relationships Work-in-progress Business plan- short & References long term Indemnity Equipment Prequalification Financial Company Capacity Strength History Continuation Organization Plans References Work In progress Who Requires Bonds? • Public Sector – Federal Government – State & Local Governments – Cherokee Nation Who Requires Bonds? • Private Sector – Private Owners – Lending Institutions – General Contractors Benefits of Surety Bonds • Qualified bidders • Reduced risk of liens Owner • Timely project completion • Defect protection Benefits of Surety Bonds • Contract reviews • Continuity plans • Expertise • Project qualification Contractor • Private construction • Lending institutions • Subcontractor protection • Technical, managerial, financial assistance Contractor Failure Over Change in Expansion Scope of Work Poor Accounting/ Project Management Financial Controls Failure Problems Uncontrollable Onerous Factors Contract Terms Subcontractor Owner Failure Failure Financial Statement Analysis Opinion Page Balance Income Sheet Statement Background Cash Flow Account Investigation Statement Schedules Contract Explanatory Schedules Financial Notes Statement Information Surety Needs Organization Chart Key Employee Business Plan Resumes Work Emergency Sub In Progress Plan References Line of Credit Recommendations Underwriting Requirements QUESTIONS?
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