Surety Bonds Presentation1 by 8CuFyj

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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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