The relationship between construction management and general contracting powerhouse Crossland Construction Co. and insurance broker and surety bond producer IMA Inc., both based in Kansas, goes back 30 years and involves many people. One of them is Columbus-based Maurice Harley, a senior financial analyst with Crossland, who has spent most of his career involved with risk, surety and construction. Monica Donatelli, who began her career in banking, is now a surety manager with IMA Inc. She is based in Overland Park, Ka.
ENR Deputy Editor Richard Korman caught up with them in late April in Boca Raton, Fla., where the National Association of Surety Bond Producers held its annual convention. They talked about how the surety producer advises Crossland on an ongoing basis about trouble on projects and potential claims and the importance of keeping lines of communication open.
Maurice Harley When you’re looking at the relevance of surety in today's market and how it competes, to do that we need professional surety producers who understand clients and surety and how to match them, and also have all the skills in underwriting and contract and financial analysis. But what’s missing a lot of the time is being just as professional on the claims side.
ENR How does that work?
Harley As a contractor I look for a surety producer-broker to have that as part of the professional services offered to us, for claims we may make and ones that may be made against our bonds.
ENR What kind of situations come up where IMA or another producer can help?
Harley It may be a payment claim against one of our subs' by a supplier, or by a union for nonpayment to the union's benefit fund. Or if a whole payment system on a project ends up in litigation, the subcontractors may make demands against the general contractor's payment bond. The surety producer may know that sub, may write the sub's bonds all the time. I can ask my bond producer to provide another level of expertise about what’s going on.
ENR Does handing over a claim or potential claim to outside counsel too soon add to cost?
Harley It adds to cost of claims.
Monica Donatelli It can and everything depends. It depends on who the outside counsel is, how well-versed and tied into the actual process that outside counsel is, and what the actual surety bond guarantee is. We as the agent are uniquely in between the surety and our clients, and in my opinion their desired end results should be exactly the same: to live up to their promises and reduce costs in the event of a claim.
ENR What's in your contractor-producer agreement for those professional services?
Donatelli Our agreement is a handshake and trust to work for the benefit of their company. A lot of times it can get really complicated with all the fine details. At the end of the day, if we can just keep our eyes as agents on making our client successful, everything else takes care of itself.
ENR Okay, I get it. But say Crossland has a nonperforming sub, and Crossland certainly won’t want to pay for work not being performed.
Harley It might happen.
ENR What’s the threshold where you decide to contact IMA?
Harley That depends on the complexity of the primary project we’re on and especially whether that subcontractor is part of the critical path. Then we would be making sure we're talking to the surety, too, to see when they would and can assist us in that situation. I'm going to get a better resolution and more quickly if my surety broker is involved.
Donatelli In another example, not one involving Crossland, sometimes a sub and GC come to point where they can’t talk to each other. The last thing the sub wants is for the bond to be called because they have to pay back the surety when the indemnity is enforced. Sometimes we just sit and talk to the people involved. Sometimes the agent helps clear the air and tries to bring down the emotions. If we do, we can get rid of all the noise and make some progress.
As far as Crossland goes, all we have to focus on is helping Crossland be successful.
Harley It goes beyond that. There’s a relationship between Crossland and this insurance broker that goes back 30 years.
Donatelli As I said, I'm in the business of trust and it's trust at all levels. I am personally invested in the success of Crossland as I believe any good agent should be for all of its clients.