How principled excellence and firmness can mean success in Construction

This entry is part 1 of 1 in the series The three Cs
  • How principled excellence and firmness can mean success in Construction

In my last blog post I wrote about the characteristics a contractor should look for when searching out a new banking relationship. 

In this post I would like to flip that coin and write about the characteristics that a contractor should work to achieve in order to make themselves bankable.  I think a simple approach to making your business bankable is to take a page from the bonding insurance industry and apply the “three Cs”

                  • character,
                  • capacity and
                  • capital.


Why is there even such a thing as bonding insurance? 


Simply, its an insurance policy that a property owner might want to require in order to ensure that contract is completed.  So, an insurance company will need to do its research in order to determine whether or not a contractor is worth providing this type of insurance. 


Bond Finance Banking


I hope you will join me on this journey of digging deeper into each of the Cs over the next few posts.  Let’s begin with


Webster’s dictionary defines the word character as “moral excellence and firmness.”  Bonding companies want to know that a contractor will do the job they were hired to do and honor their business obligations.  Banks will essentially walk down the same road when they are evaluating whether or not to provide financing to a contractor.  In order to determine a contractor’s “character”, a bonding company (or bank) will research a contractor’s reputation, including a record of previous performances, business and personal credit worthiness and other relevant references. 


Most sureties and banks will request face to face meetings with the contractor and even go so far as job site visits in order to better assess a contractor’s worthiness of being insured.  The bonding company will be the one bailing out the contractor if a contractor fails at completing a project.  This will, of course, cost the bonding company more money than intended and thus analyzing a contractor’s character is paramount.  


What is a surety looking for when evaluating a contractor’s character?  A surety will want to ensure the contractor and its owners are trustworthy, honest and good at communication.  A relationship with a surety is typically a long one, much like a relationship with an accountant.  In fact, it is important to ensure there is communication between your surety, accountant and bank.  Constant honest communication with the surety on financial matters and any disputes that may arise including those with suppliers, laborers or other contractors is imperative.  The surety needs to know that the contractor is doing everything within it’s power to complete a project.  The constant communication will go a long way towards gaining trustworthiness with not only the surety, but the accountant and the bank as well.  This will serve to build character.  


As previously stated above, a character analysis will be done on the individual owner as well as the entity itself. 


When just starting out, a contractor may find that the owner will need to provide guarantees as well as the entity in order to establish a good character.  As the contractor builds more character (good job performance history) the surety will relax its requirements for individual guarantees.  


Without good “character”, a surety will be hesitant to issue a bond.  Even if the individual owner has the capital and capacity (we will talk about these over the next three months), it means nothing if the surety cannot trust the contractor and its individual owner to fulfill its obligations and complete a project.  Think about it, would you want someone that has bad character (history of dishonesty and not completing obligations) building a house for you?


We here at CMC Network also place a high value on a potential member’s character.  The Network is here to help contractors gain access to the work they are ready for.  We  do an assessment when considering whether or not a contractor should become a member of the Network.  The relationships that the Network has worked to create are what drives the potential work projects that a contractor in the Network can be eligible to participate in. 


Therefore, we ask potential member’s questions concerning their character such as whether or not the contractor is up to date with its tax obligations.  Completing and filing the necessary tax returns timely is one way a contractor can show that it makes a good faith effort to fulfill its business obligations.  


Building character is not hard work, but it can be a hard to regain that character if trustworthiness, honesty or fulfilling obligations is lost.  So, before you venture out to sign up with a bank, surety or even an accountant, take a hard look at your company and your individual character and make sure its in credit worthiness shape.  


  • Adriane Shaffer is a licensed CPA with over 20 years of experience. She specializes in working with small to mid-size companies in the New York City and New Jersey regions. Her industries of expertise include construction, real estate, medical practices and wholesale distribution. She got her bachelor’s degree in accounting from Rowan University.

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