By: Brian Perlberg – Executive Director and Senior Counsel ConsensusDocs.
The AGC Risk Management and Surety conference was held in-person during the first week of June, and featured two sessions on a consensus approach to performance, payment and bond forms. ConsensusDocs recently updated 8 performance and payment bond forms and features cutting edge and practical techniques. Robert Duke Vice President and Surety Counsel from Markel Surety, explained how a diverse group of stakeholders including representatives from several large underwriters participated in the ConsensusDocs working group, to come up with better bond forms. All the panelists indicated that they would prefer these new bond forms to the American Institute of Architects (AIA) A312 bond forms.
Key Areas in Securing Bonds:
Robert Majerus, Vice President and General Counsel of Hensel Phelps explained some of the key areas of what he likes to see when securing bonds, which his company typically requires on most of its projects. Mr. Majerus highlighted the benefit of a new self-help provision in the subcontractor performance bond, the ConsensusDocs 706, stating it was state of the art and is the only industry bond form with such a provision. Kimberly Zanotta, Vice President and Counsel at Travelers explained that utilizing a self-help provision is not a blank check and advised General Contractors to be mindful to carefully segment costs used towards self-help work.
Clear Process for Bond Forms Provisions:
Mr. Majerus discussed that the value of the clear and specific provisions in the bond forms, such as having a two-step process for the surety to respond proactively in trouble projects that includes, first, the surety to make an investigation with a defined investigation period (which defaults to 30 days) followed by specific course of remedial actions.
The whole panel agreed that the two-step process is more robust, and proactive than the optional pretermination meeting in the AIA bond forms. Greg Horne, Vice-President with Liberty Mutual Surety strongly recommended that the industry get behind the use of these new bond forms. Attendees received legal continuing education for attending this program.
To Receive a copy of the paper supporting the program click below:
Meeting Different Expectations: A Consensus Approach to Bonding
PowerPoint Presentation – Meeting Different Expectations: A Consensus Approach to Bonding