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Sure shot
01 September 2008
Surety bonds are part of construction culture in Canada. As economic uncertainties bite, is it time to consider the real value in a time-tested solution? By Raymond Bassett, vice-president, underwriting services, Travelers Guarantee Company of Canada.
Often, the most serious risks to the success of the construction phase of a project are not found on the construction site, nor in the hundreds of pages of contract documentation, nor in the make-up of the project management team. Often, the most serious risks to a project can come from events and stresses affecting a contractor that are unrelated to this project; risks from outside the project fence.
In its May 2007 survey of 161 bankers, construction contractors, procuring agencies, technical and financial advisors, insurers and project companies from 22 countries, Standard & Poor's asked respondents to list the main reasons for problems with construction budgets and schedules on PPP projects. Among the top 10 reasons was "inexperienced or weak contractors." While S&P noted that participation in PPP projects is usually limited to larger, more established companies with good financial standing and reputations to protect, they also reported that:...
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