Many small and midsize contractors don't consult their surety-bond underwriters soon enough after running into trouble that could trigger a bond—an event that threatens a contractor's ability to remain in business, according to surety executive Roland Richter.
Business management and performance are the major factors that will determine which contractors survive the years-long downturn in the construction industry, but the size of a contractor also is important, says Richter, vice president of marketing at Liberty Mutual Surety in Plymouth Meeting, Pa.
That's because project owners more likely will continue with larger, complex projects because of the importance of those projects and their longer planning lead times. Smaller projects are easier to cancel, which suggests that smaller and midsize contractors—those with work backlogs valued at between $5 million and $100 million—“will feel the negative economy sooner and more severely,” he notes.
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