Surety Bond Quarterly - Summer 2014 - 21

technical advice on matters such as
management and administration of
construction contracts and construction accounting procedures. Bond
producers have many relationships
with other construction industry service providers, such as CPAs, bankers
and attorneys, and can make referrals
regarding these other professionals.
A bond producer can perform
an incredibly valuable service in
the event of a dispute on a project
between the construction firm and
the owner. The producer can facilitate
discussions and meetings and provide her perspective on the situation
to the surety representative. Such
facilitation by the bond producer
can often help the project continue
to progress during the dispute resolution process.
This facilitation process is valuable
to all the stakeholders on a construction project, including the owner.
Bond producers can also assist owners, particularly public agencies, with
information about how their decisions on projects are impacting their
bottom line. For instance, owners that
earn a reputation for being slow to
pay, fighting over every pay application, and issuing contracts with
onerous terms have fewer bidders,
have less competition, and, accordingly, pay more for those contracts.
Local bond producers can educate
owners about the negative impact
of such policies.
No one likes a self-promoter, but
by continuing to focus on providing
value to both construction clients and
bond beneficiaries, bond producers
can become invaluable resources to
parties at both ends of the construction spectrum and build relationships
that pay big dividends over the course
of a career.
BUILDING BETTER
CONSTRUCTION FIRMS
Patrick T. Pribyl, senior vice president
of Kansas City, Mo.-based Lockton
Cos. LLC, said his company has developed a proprietary software system
that analyzes every job a contractor
performs to measure how its originally estimated gross profit compares

with the actual profit recognized at
completion. Data from all the jobs
are then compiled to develop an overall trend line for a company, with an
upward-sloping or flat line indicating
a construction firm that is historically
conservative in its estimating and
profit recognition, while a downwardsloping line may indicate premature
earnings recognition or even project
management issues. As much of a
contractor's balance sheet strength
relies on the estimated results of
ongoing projects, understanding the
consistency and reliability of project
estimates is a key consideration in
qualifying for maximum bond credit.
Through this practice, the bond
producer provides real value to clients by helping them evaluate their
performance so they can be more
efficient and profitable.
"We use our analytical tools to gain
a better foothold with our clients,"
Pribyl said. "Our financial analytics
models help our contractors perform
due diligence for acquisitions as well
as understand the data points that
sureties use to gauge and extend
credit. We then help them tell their
story best by putting it in a language
and a format that a surety underwriter
is going to want to see."
Donald Appleby, vice president of
Denver-based Willis of Colorado Inc.,
said good surety bond producers also
make themselves invaluable to construction clients by being generous
in sharing their network, including
banking and accounting contacts.
The assistance provided by bond
producers helps solidify client relationships and helps those firms run
more efficiently, making them more
attractive to the surety industry.
"I would encourage surety bond
producers to share their opinions
about how their customers are doing
business because good contractors
value the opinions of their surety producer," Appleby said. "Contractors
realize that surety producers read
two things for a living: financial
statements-a lot of them-and contracts-a lot of them-so you gain
that knowledge of what works and
what doesn't."

LEVELING WITH
CONSTRUCTION OWNERS
While the bulk of bond producers'
time is spent with construction clients, some of their most important
work involves ensuring state and
municipal building agencies are in
a position to secure the services of
top construction firms. Sometimes,
those public agencies shoot themselves in the foot through practices or
terms that make them less desirable
to worthy contractors.
Susan Hecker, Director of National
Contract Surety & Area Executive Vice
President for San Francisco-based
Arthur J. Gallagher & Co., said surety
producers sometimes must deliver
bad news to owner and public agency
executives, informing them that onerous language in contracts and project

NASBP Advocacy Letters
NASBP sends comment letters
and other forms of assistance
to educate obligees on why certain provisions and policies are
problematic and, ultimately, not
in their own interests. NASBP
has sent letters to address a wide
breadth of subjects impacting
surety. In some instances, NASBP
undertakes additional actions,
such as phone calls or conferences, to build rapport and to
permit the responsible officials to
ask questions and receive direct
responses and feedback. Many
of these issue advocacy actions
produced positive results for
the industry.
Engaging responsible procurement officials in informative
dialogue has proven a winning
formula for positive change.
If you encounter an issue that
is problematic for our industry, do not hesitate to bring the
matter to NASBP's attention at
info@nasbp.org. NASBP will
be more than happy to call or
present a strong viewpoint in a
written letter.

NATIONAL ASSOCIATION OF SURETY BOND PRODUCERS | WWW.NASBP.ORG

21


http://WWW.NASBP.ORG

Surety Bond Quarterly - Summer 2014

Table of Contents for the Digital Edition of Surety Bond Quarterly - Summer 2014

NASBP Upcoming Meetings and Workshops
2014-2015 NASBP Executive Committee
From the CEO: We have a great story so let's tell it!
Practical Insights: What You Need to Know - Cost charging in government contracts can result in common, but avoidable pitfalls
Strength in numbers: Harness the power of networking
Profile: President Thomas M. Padilla
Proving your worth: Surety bond producers provide value to clients and beneficiaries
NASBP Fall Workshops
Contract surety claims: The promise - Pact or fiction
Commercial surety claims: A case study on the bond producer's role in assisting a client to avoid loss and maintain surety credit through bankruptcy
Develop the techniques necessary to be an effective policy advocate
NASBP Annual Meeting focuses on the importance of mentoring and critical industry information
Index to Advertisers
Surety Bond Quarterly - Summer 2014 - cover1
Surety Bond Quarterly - Summer 2014 - cover2
Surety Bond Quarterly - Summer 2014 - 3
Surety Bond Quarterly - Summer 2014 - 4
Surety Bond Quarterly - Summer 2014 - 5
Surety Bond Quarterly - Summer 2014 - 6
Surety Bond Quarterly - Summer 2014 - 2014-2015 NASBP Executive Committee
Surety Bond Quarterly - Summer 2014 - From the CEO: We have a great story so let's tell it!
Surety Bond Quarterly - Summer 2014 - 9
Surety Bond Quarterly - Summer 2014 - Practical Insights: What You Need to Know - Cost charging in government contracts can result in common, but avoidable pitfalls
Surety Bond Quarterly - Summer 2014 - 11
Surety Bond Quarterly - Summer 2014 - Strength in numbers: Harness the power of networking
Surety Bond Quarterly - Summer 2014 - 13
Surety Bond Quarterly - Summer 2014 - 14
Surety Bond Quarterly - Summer 2014 - 15
Surety Bond Quarterly - Summer 2014 - Profile: President Thomas M. Padilla
Surety Bond Quarterly - Summer 2014 - 17
Surety Bond Quarterly - Summer 2014 - 18
Surety Bond Quarterly - Summer 2014 - 19
Surety Bond Quarterly - Summer 2014 - Proving your worth: Surety bond producers provide value to clients and beneficiaries
Surety Bond Quarterly - Summer 2014 - 21
Surety Bond Quarterly - Summer 2014 - 22
Surety Bond Quarterly - Summer 2014 - 23
Surety Bond Quarterly - Summer 2014 - NASBP Fall Workshops
Surety Bond Quarterly - Summer 2014 - 25
Surety Bond Quarterly - Summer 2014 - Contract surety claims: The promise - Pact or fiction
Surety Bond Quarterly - Summer 2014 - 27
Surety Bond Quarterly - Summer 2014 - 28
Surety Bond Quarterly - Summer 2014 - Commercial surety claims: A case study on the bond producer's role in assisting a client to avoid loss and maintain surety credit through bankruptcy
Surety Bond Quarterly - Summer 2014 - 30
Surety Bond Quarterly - Summer 2014 - 31
Surety Bond Quarterly - Summer 2014 - Develop the techniques necessary to be an effective policy advocate
Surety Bond Quarterly - Summer 2014 - 33
Surety Bond Quarterly - Summer 2014 - NASBP Annual Meeting focuses on the importance of mentoring and critical industry information
Surety Bond Quarterly - Summer 2014 - 35
Surety Bond Quarterly - Summer 2014 - 36
Surety Bond Quarterly - Summer 2014 - 37
Surety Bond Quarterly - Summer 2014 - Index to Advertisers
Surety Bond Quarterly - Summer 2014 - cover3
Surety Bond Quarterly - Summer 2014 - cover4
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