Background
Owners (along with their lenders) and general contractors both share in the financial exposure that defaulting subcontractors have on their projects and while the general contractor bears the greatest burden, it is in the best interest of both to manage that risk as best as possible.
The larger the project, the more likely significant defaults will cause material financial losses and could even undermine a general contractors ability to sustain the impact. Given the economic recession that reduced construction activity and the strain a number of companies experienced, the risk of subcontractor default needs to be managed as efficiently and cost effectively as possible.
An historical weakness with subcontract bonds was the communication of the ongoing progress of the “risk” to the surety on the bond so they were aware of a potentially deteriorating situation that may result in default. Previously, getting the information to the surety has been limited by the constraints of a paper based system. The negative implications such communications have had on the general/subcontractor relationship often resulted in situations where the surety is the last to know a problem exists. By the time the surety is notified the situation has often deteriorated to the point where the time required for the surety to understand the obligation is longer than the general/owner has with the delays adversely impacting the project and compounding the dispute. A common criticism of surety bonds is that they are merely a right to sue, or a source of recovery after years of litigation, not an effective partner at a critical time.
Simply put, the surety based risk management program uses evolving technology to improve the communication to the surety so that they can be an effective partner at that critical time because they were involved instead of absent.
Effective involvement by the sureties participating on a project and the shared objective of risk mitigation brings effective risk transfer.
Surety Based Risk Management
Mission Statement
To implement a collaborative communication system for efficient and cost effective management of project data to improve risk factor identification for project participants
To utilize internet communications to improve the underwriting and risk management environment for surety markets
To manage the surety relationship to achieve maximum risk mitigation for both the surety and the general contractor/developer/owner
XBRL-CET
XBRL Extension for Construction, Energy and Transportation
Company Profile Data Sets
Beginning the transition to Digital Data with a Common Data Set for Exchanging Data
Chico Common App
www.chico-commonapp-connection.com
Log in as username “sample” and password “sample”
Go to the “Submit” Tab – Far right along the top
Upper Left – View Completed Questionnaire
That is the data ready for printing – Standard Questionnaire
Middle left – Export an XML Format
Creates an XML file that can be sent as an attachment.
Lower left - XML Cross Reference
That is the imbedded cross referenced spreadsheet.
Lower left of imbedded spreadsheet
Export the imbedded spreadsheet to excel
That is the cross referenced spreadsheet in excel we are looking to complete.
The application is designed to identify the data fields, which in turn are then part of this spreadsheet.
Project Monitoring
Performance Measurement / Predictive Analytics
Project Status Connection
www.projectstatusconnection.com
login
view / all
travelers / travelers
liberty / liberty
This is the dashboard that monitors public Caltrans and VDOT data.
Surety Based Risk Management
Dashboard for Project Data - Construction
www.sample-connection.com
login sample/sample
This is the dashboard that monitors private subcontractor data that gets uploaded to Project Status Connection for secure access by the surety.
Dashboard for Project Data - Interconnection
Financial Reporting Data Set
Examples of where contract performance data is already being made available on the internet.
Virginia DOT Dashboard
http://dashboard.virginiadot.org/Pages/Projects/ConstructionOriginal.aspx
California DOT
http://www.dot.ca.gov/hq/asc/oap/payments/public/ctnums.htm
CALISO publicly posted excel spreadsheet
www.caiso.com/Documents/ISOGeneratorInterconnectionQueueExcel.xls