Contract Surety Fundamentals

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The National Association of Surety Bond Producers (NASBP) is pleased to offer its second online course, Contract Surety Fundamentals.         

The purpose of this course is to provide a thorough orientation to the contract surety business.  A major focus of the course is to have the student understand how construction businesses are organized and managed with a strong focus on their financial accounting methods and how this relates to their bonding program.   The major types of contract surety bonds are reviewed - their purpose, their limits, their risks, and conditions for default.   This includes: legal requirements, contract language, underwriting processes, participant roles, and the claims process. In addition, the course includes an in-depth review of how to analyze contractor financial statements and organizational information critical to the underwriting process. 
       
COURSE DETAILS

Chapter 1 – Overview of the Construction Industry

  • Industry Background
  • Nature and Significance of the [Construction] Industry
  • Features of the Business Environment
  • Characteristics Common to Contractors
  • Types of Contracts
  • Bonding and the Surety Underwriting Process
  • Project Ownership and Rights of Lien
  • Contract Changes
  • Financing Considerations
  • Joint Ventures
  • Reporting for Financial and Income Tax Purposes
    o Typical Industry Operations
    o Preparing Cost Estimates and Bids
    o Entering Into the Contract
  • Planning and Initiating the Project
  • Variations in Size and Methods of Operation
  • Project Management

Chapter 2 – What Is Surety?

  • Overview
  • What Is a Surety Bond?
    o Corporate Sureties
    o Individual or Personal Sureties
  • Kinds of Contract Bonds
    o Prequalification
    o Certified Checks as Bid Security
    o Bonds for Private Work
  • Functions of a Surety

Chapter 3 – What the Surety Looks for in a Contractor

  • Capacity to Perform
  • Sufficient Financial Strength
    o Financial Statement Presentation
    o Accounting Methods
    o What the CPA’s Involvement Means
    o Surety Analysis of a Contractor’s Financial Position
    o Detailed Review of the Financial Statements
    o Analytical Procedures
  • Financial Analysis
    o Working Capital and Net Worth
    o Ratio Analysis
    o Common Financial Ratios
    o Red Flags in Financial Statements
    o Cash Flow Projections
    o Contracts-In-Process Schedules
    o Cost Records
    o Credit References
    o Credit Scoring /Modeling
    o Bank Line of Credit
    o Personal Indemnification

Chapter 4 – Miscellaneous Bonds

  • Maintenance Bonds
  • Lien Bonds
  • Release of Lien Bonds
  • Retention Bonds
  • Sales and Use Tax Bonds
  • Health and Welfare Bonds
  • Subdivision Bonds

Chapter 5 – Construction Procurement and the Roles of Those Involved

  • Role of the Owner
  • Role of the Design Professional/Engineer or Owner’s Representative
  • Construction Management Methods
    o Construction Manager (CM) Agency
    o CM at Risk
    o Design-Build
  • Bonding Subcontractors
  • Hedging Your Bets
  • A Subcontractor in Default

Chapter 6 – Bond Claims

  • Types of Claims
    o Bid Bonds
    o Performance Bonds
    o Payment Bonds
  • Performance Bond Default
    o Remedies to Avoid Default
    o When a Default Occurs
    o Tender Option
    o Take Over
    o Surety Does Not Participate in Completion
    o Other Options
  • Payment Bond Default
    o Claims
    o Communication and Documentation from Claimant
    o Claim Investigation and Resolution
    o Dispute Resolution Procedures
    o Reasonable Expectations in the Claims Process

Chapter 7 – Other Services of a Surety

Chapter 8 – Special Concerns of Sureties

  • Background
  • Surety Bond Guarantee Program
  • The Subcontractor
  • The Developer
  • Developers Becoming Contractors
  • Contractors Becoming Developers
  • Hazardous Waste Remediation Projects
  • Dual Obligee Bonds
  • Guarantees and Warranties in Contracts
  • Business Perpetuation

Chapter 9 – Popular Misconceptions

  • Letters of Credit
  • Bond Thresholds
  • The 10 Percent Case

Chapter 10 – Role of the Professional Surety Bond Producer

Each chapter concludes with review questions for students to gauge how well they are mastering the content. On completion of the course students demonstrate their comprehension of all the material by taking a final, online examination.
        

CONTINUING EDUCATION CREDIT

Hours of approved CE credit are indicated in the chart below. (This list is provided for information only and CE hours may have changed since its compilation. Click the registration link to confirm the current credit hours for your state.)
 
Continuing Education Credit Hours Approved by State
Alabama - 9 hours Louisiana* - 9 hours Ohio - 7 hours
Alaska* - 9 hours
 Maine - 9 hours Oklahoma* - 6 hours
Arizona - 9 hours
 Maryland - 9 hours
 Oregon - 9 hours
Arkansas - 9 hours Massachusetts* - 6 hours
 Pennsylvania* - 9 hours
California - 7 hours
 Michigan - 9 hours Rhode Island -  9 hours
Colorado - 9 hours
 Minnesota* - 9 hours South Carolina - 9 hours
Connecticut - 9 hours
 Mississippi* - 8 hours
 South Dakota - 9 hours
Delaware* - 9 hours  Missouri - 9 hours Tennessee* - 9 hours
Florida* - 7 hours Montana* - 9 hours
 Texas* - 9 hours
Georgia* - 9 hours Nebraska - 9 hours Utah* - 9 hours
Hawaii - 5 hours Nevada - 9 hours
 Vermont - 9 hours
Idaho* - 9 hours
 New Hampshire* - 9 hours
 Virginia - 9 hours
Illinois* - 9 hours New Jersey - 9 hours
 Washington - 5 hours
Indiana* - 9 hours
 New Mexico - 9 hours
 West Virginia - 9 hours
Iowa - 9 hours New York* - 9 hours Wisconsin - 9 hours
Kansas* - 9 hours
 North Carolina* - 9 hours
 Wyoming* - 9 hours
Kentucky* - 9 hours
 North Dakota - 9 hours Washington D.C. - 9 hours
       
* Adjuster and Public Adjuster CE hours are also available in these states.


This course is available as a training course for anyone at anytime. Please note that if you take the course for training purposes before your state has certified the course for CE credit and then later wish to receive continuing education credits for it, you will have to re-purchase the course.

CLICK TO REGISTER

Priced at $189, the course can be taken at our own pace within a twelve month period of purchase.

The National Association of Surety Bond Producers is the association of and resource for surety bond producers and allied professionals. It is solely dedicated to the needs and interests of surety bond producers and serves a membership with personnel of over 5,000 surety agents and brokers. NASBP producers engage in contract and commercial surety production throughout the United States, Puerto Rico, Guam, and a number of countries.

WebCE® is the leading insurance continuing education provider in North America. It delivers over a half million online courses annually, and offers the largest nationwide catalog of courses approved to satisfy state-specific subject requirements.

NASBP has partnered with WebCE®, a leading nationwide provider of continuing education for insurance professionals, to provide Contract Surety Fundamentals.