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ONG CHOON KIANAA090156
CHOW YIP MUMAA090026
WOON WAI JACKAA090192
CHIN TIAN XIANAA090023
WEE BING NAN
AA090188
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1. Surety bonds2. Events that can lead to fail3. Warning signs that a
contractor is in trouble4. Qualities of a solid contractor
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1. Surety Bond Construction is a business that will faces manychallenging conditions Contractor that does not prepared or capableof meeting the demands is absolutely fail Surety bond can lower the risk of contractorfailure Gives advantages to clientwith requiring performancebonds or performance
guarantee sum
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Surety provide financial security andconstruction assurance to project owner
Contractor is verified that capable. Surety company is well to analyze and manageconstruction risks The surety will verify the contractor`s ability toperform the contract and fulfill its financialobligations
It also indicate that the contractor have a well-managed, profitable enterprise, deals fairly andperforms obligations as agreed
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2. Events that can lead to fail contractor failure is always caused bymultiple reasons The most common factors are
Unrealistic growthperformance issuesCharacter issuesAccounting issuesManagement issues
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Unrealistic growthI. Change in type of work performedII. Expansion into a new geographic areaIII. Significant increase in the size of
individual projectsIV. Rapid or ever expansion
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Character issuesI. Contractor retires, dies, sell companyII. changing leadership or focusIII. No ownership or management
transition plan to ensure continuity inthe eventIV. DeathV. disability
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Performance issuesI. Inexperience in new scope or types of
workII. Personnel do not
have adequatetraining orexperience
III. Insufficientpersonnel
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Accounting issuesI. Inadequate cost and project
management systemsII. Estimating or procurement problems
III. Lack of adequate insuranceIV. Improper accounting practices
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Other factorsI. Economic down-turn and high
inflationII. Weather delaysIII. Poor site conditionsIV. Improper building plansV. Labor difficultiesVI. Lack of skilled workerVII. Material and equipment shortagesVIII.Owner not able to pay
IX. Onerous contract terms
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3.Warning sign that a contractor is introuble
Ineffective financial managementsystem
Bank lines of credit constantly borrowedto their limits
Poor estimating
Poor project managementNo comprehensive business planCommunication problems
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Ineffective financial managementsystem
I. Inability to forecast cash flowII. Cash flow is tight
III. Receivables are turning over too slowIV. Vendors are demanding cash on
delivery for supplies and materialsV. Bills are past dueVI. Profit fade
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Bank lines of credit constantly borrowedto their limits
I. All credit fully securedII. Credit lines not being renewed
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Poor estimatingI. Revenue and margins decrease over
timeII. Continued operating losses
III. Loss or reduction of bonding capacityIV. Bidding jobs too low
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Poor project managementI. Inadequate supervisionII. Inability to administer collect changeordersIII. Project not completed on timeIV. One or more contracts have claimV. Company is continually involved in
litigationVI. Increase in backlog without adequate
project management resourcesVII. Lead time to prepare bids too short
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No comprehensive business planI. Contingency plans are not developedII. Company does not have a goals,
objectives and proper planning
III. Fails to adhere to the business plan
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Communication problemsI. Disputes between contractor and
ownerII. Poor communication from field to
managementIII. Lead to not well construction and
rejection from client
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4. Qualities of a solid contractorGood contractor should have thesecharacteristic,o Organizationo
Financeo Marketingo Project controlo Planning
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o OrganizationI. Formal and on-the-job training for all levels of
employeesII. Logical, incentive-based compensation planIII. Tenure for proven field superintendents and
internal promotion when possible
IV. Depth at all levels of the organizationV. Succession planningVI. Up-to-date, distributed organization chart
VII. Culture of loyalty, ownership, and urgencyVIII. Visionary, inspirational leadershipIX. Low turnover
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o FinanceI. Solid management of cash flow and
overheadII. Profit-focused company
III. Timely payment of billsIV. Management of debtV. Reasonable
growth withoutoverextendingresources
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o MarketingI. Superior estimating skills and systems
to manage costsII. Satisfied customers
III. Well-defined market and 1-3 yeargrowth planIV. Company culture where everyone is a
great salesperson
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o Project controlI. Closely managed projects with early
warning systems to catch potentialproblems
II. Litigation avoidanceIII. Productive field
managers trained
to improveprocesses
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o PlanningI. Disaster preparednessII. Adequate life insurance coverageIII. Shareholders agreements detailing
buy-sell agreement for multipleshareholders
IV. Only qualified and interested familymembers in management
V. Detailed business planVI. Strengths, weaknesses, opportunities
and threats
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