The outstanding results of the surety industry over the last 10 years are beginning to make some buyers question the value of surety bonds. However, there are dynamics going on in the construction industry and commercial markets that indicate the need is greater than ever for their use.
For decades, the construction industry did not see the pace of change and productivity gains other industries generated, but this is no longer the case. From Public Private Partnerships (PPP) to alternative delivery methods, including Integrated Project Delivery (IDP), the construction industry is changing rapidly, and projects have become more complex and difficult to build, pushing the construction industry to adapt. But like any industry experiencing increased change, some firms are quicker to adjust than others.
According to the 2016 AGC/FMI Risk Survey, conducted by the Associated General Contractors of America (AGC) in collaboration with consulting firm FMI, the risk for subcontractor default now ranks as one of the top three risks within the construction industry along with skilled craft labor shortages and onerous contract language.
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