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Contract Failure – Prevention and Response

At Global Bonds, we use our experience and knowledge to help avoid extreme risks and overcome challenges. We have attorneys, accountants, and analysts to help sort through viable projects and mitigate risks. Our accords ensure interventions for proactive respond in many different ways, and not just when a contract is in default or a project fail.

Our expert underwriters make sure impartial judgments are justified and capable to intervene and determine whether a contract can perform, and does not expect a loss. However, losses do occur. Contractors may default if there are drastic financial changes in the economy, unforeseen changes in market conditions, or death or illness of a key employee are the culprit. Usually, it takes a combination of events to force a contract to default. When that happens, surety bond producer is there. With the surety company’s technical knowledge, practical experience, and resources and the cooperation of the owner, losses can be minimized to the satisfaction of all parties.

A minimal number of defaults signify that surety have been successful in screening out unqualified contract from the analysis process. If inadequately financed or incompetent contracts are allowed to go through, the number and cost of defaults will increase.

The surety is paid for prequalifying the contract and assuring that the contract will perform. One of the most difficult variables to account for in the prequalification process is the interdependent nature of projects. This is why it is important not only to have the prequalification process conducted proficiently by the surety, but also to have its financial backing in the event default occurs.