Surety

SURETY CONSULTING SERVICES

CONTECH is experienced in providing consulting services to the surety industry. CONTECH is particularly suited for surety consulting services because of its professional and technical expertise combined with its constant and continual exposure to present-day construction and construction-related issues. CONTECH combines the hands-on experience of construction professionals who have managed construction companies and projects, and surety claims professionals who have handled major surety defaults for large and small Treasury-listed sureties with its experience in almost every financial aspect of project development and construction, corporate operations and financial reporting and asset valuations. Their skilled services include:

Performance bond and Payment bond exposure analysis
Determining progress and performance of construction contracts, bonded and non bonded
Turnarounds of troubled construction projects and companies
Cost-to-complete evaluations
Engineering analysis of design
Preparation and analysis of claims for contract damages
Expert testimony
Forming, administering and analysis of contracts
Preparation of claims and proof of damages
Evaluating alleged default or convenience terminations
Defenses and affirmative actions for recovery
Evaluating and projecting cash flows
Evaluating back charges and extra work issues
Contract receivables, payables and commitments
Job cost accounting audits
Project financial status reports
Auditing corporate books and records
Evaluating cost and time to complete
Evaluating exposure to liquidated, consequential and other damages
Evaluating financial condition of principal/indemnitor
Reletting contracts
Managing project completion
Managing contract funds of the principal
Funds control

CONTECH tailors its work approach to the specific issues raised by a particular obligee, claimant, dispute or situation. CONTECH’s staff is readily available to provide timely opinions regarding the methods or actions to mitigate exposure and contractual liability, identify the available methods for minimizing loss and expense, and provide budgets for a defined scope of work based upon the needs of the particular case.

Initial Investigation.

As a result of a surety’s receipt of notice such as a claim or lawsuit concerning its Principals performance, the obligee’s issuance of a cure notice alleging default, an obligee’s actual default termination notice or a claimants payment demand, CONTECH’s initial investigation is aimed at expeditiously preparing a reasonable assessment of the Principals bonded obligations under the construction contract and bond. After an investigation, CONTECH is capable of producing a Project Financial Status Report which includes written narratives of preliminary findings and opinions of the project. This assessment is a snapshot of where the project stands resulting from a review of the Principals contract, bond, documents, records, interviews and visits to the job site to ascertain:

Quality and quantity of work installed
Physical percent of work completed
Status of contract receivables, payables, retention, taxes, commitments and cash flow
Outstanding contract balances
Approved and disputed change requests
Extra work and changes
Cost and time to complete the work
A risk analysis and contingency recommendation
Recommended action plan
Entitlement and damage issues, mitigating factors, work plan and budget

Prior to the start of an engagement, meetings with the surety and counsel (if assigned) are essential to determine the limitations of investigation or actions, clarify objectives and expected outcomes, gather general information including documents, discuss issues and legal theories and determine accessibility to the Principals work place, records, personnel and job site.

The initial investigation results in the Draft Project Financial Status Report, an approved action plan for the troubled project, a work plan and budget for consulting services and a schedule for achieving near term milestones and work product deliverables for the Detailed Investigation.

Detailed Investigation.

As authorized, a detailed investigation of the Principals business, the Principals construction projects and other matters of concern to the surety may be undertaken by CONTECH’s construction professionals. The necessity, scope and required level of effort to perform a detailed investigation greatly depend on the severity and complexity of the troubled project or projects, financial condition of the Principal, its cooperation and adequacy of its records, actions of the obligee and liability of the surety. The earlier findings will be confirmed or modified by performing tasks such as the following:

Confirm and reconcile contract balances, retainers and change orders with the obligee
Verify contract commitments and payables to third parties, subcontractors, materialmen and vendors
Audit cost and commitment ledgers for purchase orders, subcontract agreements and other obligations
Identify available back charges for incomplete or defective work, delays and warranties
Quantify and value the materials and equipment stored on the site
Prepare a bottoms-up estimate and budgets for the cost to complete contract obligations
Prepare a schedule to complete the work identifying trade subcontractors and major materials
List the changed conditions and disapproved change requests; mitigating factors for Principals delays
Identify Obligees liabilities regarding delays, incomplete engineering, improper sequencing, defective plans and specifications, differing site conditions, erroneous information, interference or disruption
Evaluate the Principals business condition inclusive of financial statements and underlying support, debt service: assets, cash flows, capabilities, feasibility of a workout
Identify opportunities for maximizing recovery: capital assets of Principal and indemnitor, feasibility of business turnaround or project turnaround, collecting payment for extra work or back charges, claims and likely outcomes.

This phase of the investigation is completed with a report which includes the information sources, an analysis of the strengths and weaknesses of potential claims, recommended strategies and tactics.

Completion and Recovery.

CONTECH provides assistance to the surety in the execution and management of the surety’s strategic plan and tactics for completing its contractual obligations, for turnarounds of the business or projects, for developing claims to recover payments for extra work, back charges, delays, wrongful terminations and other entitlements, and for providing litigation support and expert testimony for surety defenses of payment bond or performance bond liability and surety’s entitlement to contract funds, claims preparation and proof of damages. In support of the completion and recovery effort, CONTECH will:

Supplement a Principals organization by augmentation with management, financial, engineering, procurement and construction personnel
Provide construction management and project controls for completing troubled contracts
Provide turnaround management for the Principals construction enterprise
Relet and manage replacement contractors, subcontractors, fabricators or suppliers
Investigate fraud, potential liability of accountants and fidelity matters
Establish, control, verify invoices and disburse trust account funds for completion cost
Manage or monitor contract completion to ensure on-time and least cost performance

CONTECH’s approach is to be flexible and to only provide the service required by the surety for the specific situation.

- - -