Issues Involving Surety for Public Transportation Projects (2012) / Chapter Skim
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Pages 49-54
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From page 49... ...
49 tractor's obligations (other than warranty) in the amount of 10 percent of the contract price, which could be secured by a cashier's check, LOC, or performance bond.
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From page 50... ...
50 highway and bridge work. Sureties believe this concentration is not, as AGC suggests, an artificial limit on competition, but simply a natural reaction to the higher dollar risk and associated management specialization required for megaprojects.
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51 ing the way for a co-surety relationship for the project's performance bond. In a typical co-surety arrangement, the sureties either share the risk of loss in the same percentages as their contractors share in the joint venture, or the sureties may agree to be jointly and severally liable under their bond for the performance obligation of the underlying joint venture contract.161 Regardless of how the sureties agree to share the risk, this type of arrangement expands the contractor's ability to get a large bond it could not otherwise obtain.
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From page 52... ...
52 case-by-case basis, taking into account the specific risks transferred to the design-builder as a result of its assumption of design responsibility.169 The major specific areas of surety concern in underwriting a DB contract include traditional surety concerns as well as some unique to DB: 1. Performance complexity (use of new technology or required performance guarantees)
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From page 53... ...
53 problems for the surety, such as 1) surety bonds guarantee performance of work, not procurement of specific, specialized pieces of equipment, which carries a different risk and creates difficulty in underwriting and setting premiums; and 2)
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From page 54... ...
54 duration beyond which their liability ends. The concept of extended exposure during a period of O&M is simply foreign and, therefore, difficult if not impossible to evaluate and underwrite.
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