Category: Construction Bonding Specialists - page 2

Nordlocker, an encryption software firm, conducted research in 2021 and found that the construction industry faced the highest risk of ransomware attacks among 35 analyzed industries. This risk has increased since then, with Nordlocker reporting in 2023 that the construction sector experienced the most ransomware attacks from January 2022 to January 2023.

The construction industry’s growing reliance on digital technology, particularly computer-aided design (CAD), building information modeling (BIM), and cloud-based collaboration tools, has made it a vulnerable target for cyberattacks. Many organizations in this sector lack adequate cybersecurity plans and have poorly trained employees in identifying and responding to cyber threats.

Ransomware, a malicious attack where data is encrypted and a ransom is demanded for access restoration, poses a significant threat. Paying the ransom doesn’t guarantee data recovery, and the average cost of a ransomware breach is around $4.44 million, damaging a company’s reputation.

Fraudulent wire transfers, phishing scams using social engineering, and compromised emails are prevalent in the construction industry. Cybercriminals impersonate authoritative figures to manipulate financial transactions.

The construction sector is also at risk of intellectual property and data theft, which can lead to significant reputational damage. Protecting sensitive information, such as SSNs, credit card data, and proprietary designs and patents, is crucial to mitigating these cyber threats.

Six Essential Steps to Strengthen Your Construction Service’s Cybersecurity

Privileged Access Management:

Continuously monitor and assess access rights to safeguard your information.

Data Governance and Security:

Categorize data by sensitivity and prioritize the protection of critical data assets.

Regular Secure Backups:

Mitigate potential data and system loss in the event of cyberattacks.

Team Member Education:

Ensure your team is well-informed about industry-specific cyber risks and can recognize and report social engineering attempts.

Enforce Cybersecurity Standards in Contracts:

Reduce third-party risks by requiring external partners to adhere to robust cybersecurity practices.

Implement an Incident Response Plan:

Define immediate actions and strategies to minimize potential losses in the event of a cyberattack.

Boost your cybersecurity defenses today; we’re here to help address your inquiries.  

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a dedicated surety-bond-only agency with decades of bonding experience, we strive to discover surety solutions for all types of cases, ranging from routine to challenging. Contact us online or call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: www.cpsmi.com

In the world of construction, bonding plays a crucial role. For many contractors, obtaining a bond isn’t just a mark of credibility, but also a legal necessity for many projects, especially government ones. For those who are unfamiliar or just starting, understanding the smaller nuances of bonds can be daunting. One of the initial steps towards bonding is the small bond application, an essential tool for contractors just breaking into larger projects.

What is a Contractor Bond?

A contractor bond, also known as a construction bond, is a type of surety bond. It ensures that the contractor will adhere to the specified terms of the contract. If the contractor fails to fulfill the contract’s requirements, the bond can compensate the project owner financially.

Why Consider a Small Bond Application?

For emerging contractors, a small bond application is a stepping stone. Here’s why:

• Builds Credibility: Even if it’s a small bond, having one demonstrates your commitment and builds trust with potential clients.
• Legal Requirements: Some smaller projects or municipalities might still require bonds, even for less extensive contracts.
• Gateway to Larger Bonds: Successfully holding and honoring a small bond can make it easier to qualify for larger bonds in the future.

The Small Bonding Application Process

Though the specifics can vary based on the bonding company, the general process often involves:

• Personal and Business Financial Statements: These offer insight into your financial health, assuring the bond issuer of your credibility.
• Work Experience and Project Details: This includes the nature of the projects you’ve handled, duration, cost, and other specifics.
• Credit Score Check: A good credit score can improve your chances of approval.
• Professional References: These can vouch for your work ethic, reliability, and professionalism.

Tips for a Smooth Bond Application

• Ensure All Documents are in Order: Double-check to see if all required documents are present and filled out accurately.
• Seek Assistance: Seek help from a professional who is experienced in the process.
• Maintain Good Credit: Regularly check your credit report for any discrepancies and maintain a healthy financial practice to keep your score up.

A small bond application may seem like just another formality in the vast construction industry. However, for budding contractors, it represents growth, potential, and a commitment to excellence. If you’re a contractor on the fence about applying, remember: every big journey starts with a single step, and in the world of construction, this might be yours.

Need a SMALL BOND or a BIG BOND? We offer a variety of surety bonds – and BONDS are all we do!

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/

Most construction projects require contractors to provide bonds, which protect the owner against non-payment, lack of performance, shuttered business, or warranty issues. Also known as contract bonds, construction bonds guarantee the bondholder will fulfill the contract terms.

Contractors generally purchase construction bonds to protect project owners from monetary loss. If an issue arises, the owner can file a claim with the surety company, which will intervene to guarantee the contract is fulfilled. After the bond claim is settled, the surety will recapture all expenses from the contractor who purchased the bond, according to the terms set by their agreement. 

Main Parties Involved in Construction Bonds:  

Principal
The person or company purchasing the bond, typically the general contractor or subcontractor. 

Surety
The company that provides the bond for the project, is generally responsible for arranging the completion of the contract if the contractor fails.

Obligee
The party protected by the bond, usually the property owner, public agency, or other party. 

Most contractors need a bond because they are used on construction projects whenever the owner needs additional monetary protection during a project. Construction contracts can provide a decent level of protection, but a breach of contract can be expensive, time-consuming, and often requires court.

Securing a construction bond should be done with a reputable surety broker, who will advise you on the best way to submit your program requirements to a surety company.  Surety brokers will also make sure you receive the best terms and conditions. 

If work does not get completed, the contractor defaults, or payments are not being made accordingly, a claim against the bond can be filed. After a claim is made, the company will investigate, and the principal will be contacted to verify facts and amounts. 

To settle a bond claim, the surety might hire a new general contractor to finish the job, pay the obligee for damages sustained, or issue a payment to a subcontractor who wasn’t paid according to the contract.

We have decades of surety bonding experience, from simple to complex; contact us to learn how we can assist you. 

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

The establishment of electronic surety bonds is owed to the National Multistate Licensing System and Registry (NMLS), an organization that simplifies the process of obtaining and validating professional credentials, such as licenses, across different states. The creation and prevalence of electronic surety bonds are primarily due to NMLS’s advocacy for their adoption and their provision of secure technology to facilitate a smooth electronic filing process.

Before the advent of electronic surety bonds, bond processes were entirely paper-based, with inherent disadvantages. With the swift advancements in information technology at the onset of the 21st century, most industries, including those managing financial, legal, or other confidential data, began shifting toward digital systems. It was apparent that the bonding process could be more efficient. This prompted the NMLS to step forward and steer the revolution. And so, the digital transformation of surety bonds came into existence. Today, electronic surety bonds are rapidly gaining popularity and are on the verge of becoming the primary, if not the only, choice!

Advantages of Electronic Surety Bonds

The merits of electronic surety bonds are best appreciated when contrasting them with the drawbacks of traditional paper-based bonds. Paper bonds often took longer to process, were more challenging to initiate, and had a higher probability of errors. For those who needed bonds quickly, the process could be unnecessarily lengthy or prone to unexpected interruptions due to these paper-based systems.

The introduction of electronic bonds dramatically improves these issues, ensuring the bonding process is highly efficient, with many bonds being issued within 24 hours. The digital nature of this process also reduces the operational costs for bond providers, savings that are often passed down to those seeking bonds. Furthermore, the application for electronic bonds can be initiated instantaneously, eliminating the need to wait for physical paperwork to arrive. Thus, most individuals find electronic surety bonds superior in almost every aspect.

How and Where to Submit an Electronic Surety Bond?

Initially, when electronic surety bonds were launched in 2016, it was up to individual states to decide whether they would recognize these bonds submitted digitally. Only a handful of states agreed to do so in the beginning. However, as the program demonstrated its effectiveness, more states began to accept this new format. By the beginning of 2022, 43 states had consented to acknowledge electronic surety bonds. The states that have yet to adopt this process include:

• Maine
• New York
• Pennsylvania
• Alabama
• Florida
• New Mexico
• Arizona

What is the Process for Submitting a Surety Bond Electronically?

The process for electronic filing may differ based on the type of bond, the issuing entity, and the bond amount. Generally, the individual seeking the bond is required to submit specific fundamental details via an online platform:

• A completed bond application.
• Consent to conduct a credit check.
• Supplementary documentation (for instance, a financial statement or a copy of the bond requirements).

The surety agency that facilitates the connection between the bond seeker and the bond provider oversees the specifics to ensure that the electronic submission is conducted appropriately and complies with all relevant regulations. Many opt to utilize digital platforms such as DocuSign, which enable formal signing and document exchange between parties.

Fast track applications, we have the surety bond you are looking for, including online rapid bonds for jobs under 400,000!

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

Relationships are vital in the commercial construction industry, specifically between general and trade contractors. While general contractors subcontract work to a variety of subcontractors, trade contractors focus mainly on projects given to them by general contractors, making this dynamic for both sides mutually advantageous.

The partnership between subcontractors and general contractors can be complex. General contractors typically require subcontractors to get prequalified before performing any work or being invited to submit bids on jobs. Subcontractors usually need to provide information to the general contractors, including safety records, finances, bonding capabilities, litigation history, insurance coverage, relevant work history, experience, and more. Trade contractors also perform their own vetting process to determine goals and ensure they are able to work with a reputable general contractor.  

In both cases, information should be funneled to owners during pre-qualification or when securing the contract. All plan changes or specs should also be reviewed so extra work doesn’t add up down the road. 

Clauses are generally what to look out for in contracts. Here are some examples:

Pay-when-Paid and Pay-if-Paid
These two main contract provisions should be analyzed intensely before any signature. Pay-when-paid contracts require the general contractor to pay the trade contractor when the owner pays them. Pay-if-paid requirements outline subcontractor payment if the general contractor gets paid. If they do not receive compensation, neither does the subcontractor. 

Flow-down and Pass-through
While incorporating the terms of the general contract with the owner into the subcontract, the subcontractor assumes the same duties toward the general contractor as they would to the owner. Prime contracts should be reviewed if these clauses are on the table since they can help specify whether there are terms that should be avoided. 

Change Orders
All work should be submitted in writing, and jobs should never be completed without an agreement from the owner. There should be a designated change order authorized person as well. 

Indemnification Clauses
General contractors who are negligent will be disciplined accordingly due to this clause. For subcontractors, their indemnification should only require them to assume liability for their own carelessness. 

Payment Bonds
General contractors are almost always required to post a payment bond to protect the owner, while private owners are also increasingly requiring them. If established, these bonds help to avoid liens filed against their property. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

Construction firms highly covet commercial government contracts, as public spending on construction projects exceeds hundreds of billions of dollars yearly, making them a lucrative opportunity. While most construction firms rely on government contracts as their sole source of revenue, others bid on various public and private jobs.

Public construction contracts are governed by lengthy laws, which vary based on the agency. However, there are some consistencies between requirements that all agencies abide by. Read on to learn more about bidding on government construction contracts. 

Construction Bonds
Contractors often need to guarantee bids, construction work, and payments to subcontractors or suppliers by government agencies. Moreover, the terms of the bid should be obeyed. Typically, three parties are involved: the obligee, the principal, and the surety. The three most common types of bonds required on construction projects are bid, performance, and payment. 

Pre-Bid Site Visit
To allow contractors to better understand the project at hand, owners will often allow site visits. Often, contractors can ask questions regarding the bid or network with relevant contractors. Sometimes, these meetings are mandatory, and failing to attend will result in bidding ineligibility.

Competitive Bidding
Budgets are top-of-mind for most public construction projects, and most often, contractors can bid on projects after an architect completes the full plans. Prior to the bid date, projects must be advertised in one way or another. The lowest responsive, responsible, and eligible bidder will be given the job. 

Special Programs
Women, minorities, and small-business owners should have an equal opportunity to bid on projects, so a number of state, local, and federal agencies have created programs to ensure they are awarded accordingly.

Davis-Bacon Act of 1931
This federal law forces contractors to be paid local wages based on earnings paid to the various classes of laborers working on other local construction projects. Varying from state to state, wages will differ based on location. 

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

The industry offers a large variety of surety bonds, which are required to bid or work on all public works projects, private construction, remodeling, and new construction.

The different types of surety bonds include bid bonds, performance (contract) bonds, and payment bonds. These bonds offer protection for the project owner, taxpayers, investors, etc., associated with private projects. Typically, projects need all three bonds.

Bid Bonds
These bonds guarantee that the contractor will accept a job if they win the bid. They are required by federal law on all projects over $100,000. State-sponsored public work projects also usually require bid bonds. If the winning contractor decides not to accept the job, the project owner is able to submit a claim to cover costs linked to evaluating new contractor bonds. 

Performance Bonds
Sometimes called contract bonds, they guarantee that the contractor will fulfill the entire project, abiding by laws and industry standards. If they fail to do so, the project owner can file a claim to recover any financial loss resulting from another contractor re-doing the work. 

Payment Bonds
These bonds guarantee that the contractor will pay if the work is not completed in accordance with the terms of the contract by the workers, subcontractors, or suppliers. A claim by any of the aforementioned parties can result if the contractor fails to remit payment. 

Contractor License Bonds
The only type of construction bond that is not project-specific; they don’t apply to a single project. These bonds guarantee that the contractor will conduct business in a lawful and ethical manner, meeting industry standards. Some states require all contractors to be licensed at the state level to operate legally. 

In terms of cost, the contractor usually pays only a small percentage of the required bond amount established by the project owner or licensing authority. A surety bond company establishes a premium rate for each applicant based on their personal credit score, industry experience, and personal/business financial statements. Those in good standing usually pay one- to three percent of the total bond amount as an annual premium. 

Construction Bonding Specialists is a leader in obtaining construction surety bonds. We can assist you in winning more jobs through bond terms. Contact us today to learn more. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/

At the end of 2021, the 10-year treasury note reached only 1.5 percent, creating low-interest rates. Less than a year later, in October 2022, the rates peaked at more than four percent, which hasn’t been seen since April 2010. These unusual bond market fluctuations force investors to constantly recalibrate to keep up. 

Because of the inverse relationship between bond yields and prices, bond issues fall when yields rise. When the demand decreases, bond issuers typically turn to higher yields, which lowers the value of the lower yields already on the market. 

Higher interest rates often go hand-in-hand with higher inflation, following long-term growth and trends. An inflation surge between the first quarter of 2021 and mid-2022 saw a Consumer Price Index (CPI) level of 9.1 percent, the highest reading since 1981. Bond markets usually fluctuate based on upcoming financial policy shifts. 

Bill Merz, head of capital markets research at U.S. Bank Wealth Management, said, “Bond yields rose in 2022 primarily because the Federal Government pivoted to a much more hawkish position, as investors anticipated aggressive interest rate hikes to rein in inflation.” 

An economic downturn can result from issues such as war, supply constraints, and pandemics, all of which have happened in recent history. Since these various events can disrupt the economy, consumer spending often wavers. Interest rates could skyrocket if the economy gets a second wind and accelerates growth. However, long-term yields could fall if the economy takes a downturn.

Let’s get to the point: what does this all mean for bond investors? In short, buying bonds during a high-interest rate period will yield higher results. 

Merz said, “We’re putting greater emphasis on core bond holdings. We believe that bonds offer compelling defensive characteristics relative to stocks. Our emphasis is on high-quality investment-grade taxable and municipal bonds as well as a dedicated exposure to short-term U.S. Treasury investments to manage overall risk exposure should interest rates continue to rise in the near term.”

The recent housing market activity has paved the way for a beneficial supply-and-demand balance in the mortgage market. 

“This remains a time when investors are likely to benefit from holding more high-quality assets and fewer volatile assets than in a typical period.” 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/