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Contractor Failure: Are you at Risk?

 
    Contractor failure can be traced to many causes including situations that are out of the contractors control such as weather, labor difficulties, and material shortages. The Surety Association of America (SAA) reviewed 86 bond claims and identified the main causes of contractor failure that are within the contractors control.

    Contributing causes present in each failure:

    Unrealistic Growth
    Performance Issues
    Character / Personal Issues
    Accounting Issues
    Lack of Management Control
               37%
    36%
    29%
    29%
    29%

    Are you at risk? Some First Signs of Trouble

    • Decision to move into a different type of work / location
    • Significant increase in the size of individual projects
    • Key staff slowly leaving the organization / not quite enough personnel
    • Estimating mistakes
    • The purchase of inadequate insurance to save money
    • Constantly involved in disputes or litigation
    • Rank lines of credit fully drawn - all the time
    • Some vendors begin demanding COD for supplies
    • Miscommunications between field and management
    • Constant postponing of tax returns and financial reporting
    • Revenue and profit margins decreasing over time
    • Change orders increasingly difficult to collect
    • Retainages held for longer periods
    • Using the cheapest accountant / poor accounting practices
    • One-man-show management style / unwilling to trust or delegate
 
Surety Advisors, LLC - All Articles
Surety Advisors, LLC - All Articles

IMPORTANT NOTE: While we specialize in Surety Bonds, this Website provides only a simplified description of bonds and is not a statement of contract. Wording may not apply in all states. For complete details of bonds and conditions, be sure to read the bond, including all endorsements, or riders, if applicable. Bonds CANNOT be bound, amended, or altered by leaving a message on, or relying upon, information in this Website or through E-Mail.
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