Manideep Tummalapudi
Colorado State University
Fort Collins, USA
Christofer M Harper
Colorado State University
Fort Collins, USA
John Killingsworth
Colorado State University
Fort Collins, USA
In the United States, construction contracts require that contractors submit surety bonds, hence shifting the contractor’s risks to the sureties. In order to take on the risks of project completion, the sureties employ a complex time-consuming evaluation process that assesses several factors of a contractor that are subjective to make a surety credit recommendation. Several small and emerging contractors find it very difficult to attain bonding capacities as they do not know the factors that go into the sureties’ consideration to extend surety credit. The purpose of this study is to identify the surety bonding criterion that influences bonding decisions through a series of interviews with surety professionals possessing extensive experience in the bonding evaluation process. The outcome is a list of factors that underwriters consider in issuing a surety credit to contractors. Understanding the surety bonding criteria employed by underwriters enhances contractors’ ability to secure required bonding capacities for their future projects.
Key Words: Surety Credit, Construction Bonding Criterion, Contractor Awareness, Capital, Capacity and Character.