Volume 36, Number 7, July 2001
Obtaining Surety Bonds Becomes More Difficult for Glazing Contractors
With underwriters and their reinsurers booking losses more frequently and with more severity, glazing contractors are finding it more difficult to gain surety bonding. “Gaining surety bonding is becoming more demanding. They [surety agents] are asking for more financial information from us, and the bond rates are getting tighter and tighter,” said Jerry Walters, vice president of Toledo Mirror & Glass Co. in Toledo, Ohio. “They are asking for information such as annual reports, work proposals and backlogs. They are trying to see if we made money or if we are just barely hanging on,” he added.
The April 30, 2001 issue of Engineering News Record (ENR) says that while surety underwriters had enjoyed a decade of “unparalleled success during the economic boom,” it now appears to be coming to an end. Underwriters have seen losses ranging from $10 million to $40 million.
According to one insurance executive, the tougher underwriting standards will create new limits for contractors. For example, ENR said companies that once were able to bond $50 million worth of work may only be able to bond $30 million, and it will be more expensive.
In related news, the construction-consulting firm of FMI Corp. has compiled a list of helpful tips for glazing subcontractors seeking surety bonding. “Small contractors are getting larger jobs—but also suffering larger failures—and claims against these small companies are increasing,” stated FMI Corp.’s 2000-2001 U.S. Markets Construction Overview. Below are a few pointers from FMI Corp. for glazing contractors seeking surety bonding:
• Maintain good cash flow and bank credit and corresponding records;
• Develop a strategic plan for your business, which shows the surety how you are thinking about your company’s future capacity for work and growth;
• Focus on the financial weaknesses identified in your financial statements to see what can be improved upon;
• Maintain a good relationship with a professional surety bond agent;
• Don’t take on too much work;
• Keep a detailed list of work references and recommendations to provide to sureties. Keep the list updated with projects, owners and general contractors for whom you have worked. Ask them for letters of recommendation and keep a file of them.
Industry Leaders and Legislators Asked to End Certain Risk Management Practices
The American Subcontractors Association (ASA) has launched a campaign asking leaders in the construction industry and public policymakers to cease business practices and public policies that shift virtually all insurable risks down to subcontractors.
“Subcontractors should accept liabilities for risks that they control, but not for risks controlled by others,” said ASA president and vice president for the Fenton Rigging Co. in Cincinnati, Richard Kohls. “It’s not enough just to acknowledge that the problem exists. ASA is telling leaders why the problem exists and what they can do about it,” he added.
Pennsylvania Court Rules Engineer Did Not Practice Architecture Illegally
A Pennsylvania court has ruled that Robert R. Rosen, a professional engineer who placed his seal on plans for a building renovation project, did not engage in the practice of architecture and should not have been fined by the state architects board.
The case follows Philadelphia lawyer Charles Bowser, who had hired Harold Murray of Murray Drafting Services to survey a building he owned and to create a set of drawings for its renovation. Bowser approved the plans, but then consulted with architect Charles Lomax to approve the structural integrity of the plans and to affix a professional seal on the drawings, which was required in order to get a building permit. Deciding Lomax’s fee was too high, Bowser instead hired Rosen to apply his seal to the plans.
Lomax filed a complaint with the Architects Licensure Board, saying Rosen and Murray had engaged in the practice of architecture without a license. The board agreed and imposed a civil penalty of $1,000 against Rosen and $300 against Murray. The two appealed to the Pennsylvania Commonwealth Court, arguing that their services on the project were within the reach of both architectural and engineering disciplines. The court agreed and held that the architects’ law should be read in tandem, “because each statute explicitly recognizes that there is indeed an overlapping of the professions, and neither one establishes a clear, mutually-exclusive, delineation between the two.” The court continued, “The practice of engineering as defined in the statute permits engineers to design buildings and engage in construction planning and management.”
ENR’s Top 25 General Building Contractors for 2000
Engineering News Record announced its list of the country’s top 50 general building contractors for 2000. Listed below are the top 25 companies and their 2000 total revenue in millions of dollars. According to ENR, domestic revenue includes construction management at-risk contracts for general building and manufacturing plants and excludes process plants.
Another Good Case for Safety Glazing
A Hertz rental store in Salinas, Calif., was recently the site of an unbearable situation. A 200-pound black bear crashed through a glass door and was holed up in the store for four and a half hours before police officers closed off the street, surrounded the building and tranquilized the animal.
According to a news release, the bear was not injured, but the glass door was destroyed. Department of Fish and Game officials returned the bear to the wild.
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