Manage Quality Secrets of Bonding 154: Be A Bean Counter (The Importance of Bid Results)

It’s not sexy. Nobody has it on their business cards. It may not be in your official job description. But this article is the start of your new vocation as an official Bean Counter!A major area of surety bonding is “Contract Surety.” This refers to bid and performance bonds for construction contracts. When we set up a new account, an amount of bonding capacity is established and the individual bond requests are processed within that line. It is possible for a client to use up the full capacity of their line, then our underwriting department could consider granting an exception to support additional work.Efficient management of the line can minimize instances where an exception is needed. Here’s where the bean counting comes in.We manage bonding capacity the way a bank runs a credit line. A series of individual transactions (bonds) can equal the full capacity amount (referred to as the “aggregate”). Bank credit lines work the same way. For the bond or bank customer, it is advantageous to maximize the available credit. Prompt reporting of bid results helps accomplish this objective.

The Importance Of Reporting Bid Results Promptly

When a bid bond is approved / issued, the underwriter debits the amount against the aggregate capacity. However, the full contract amount is used, not the dollar value of the bid bond. Example: A 10% bid bond for $100,000 actually uses $1 million of aggregate capacity. Therefore, when it is known that the bid is not likely to result in a contract award, this fact should be reported so we can restore the capacity.

Detailed bid results are needed on low bids in order to process to the final bond. Example: Our guy has a low bid for $5,000,000. The second bidder was $5,400,000. Third bidder was $5,550,000. Because our bid was less than 10% below the second bidder ( the Bid Spread ), the adequacy of the contract amount is supported. If our client was more than 10% below the second bidder, there would be an additional evaluation before proceeding with a final bond.

Bid Spreads – in cases where the bid spread is excessive, it is important to have a prompt discussion with us. If there is a bid calculation error, and the contract price is inadequate, there is a limited amount of time to withdraw the bid without penalty (such as a bid bond default / claim).

Low bids may be for lesser amounts than the original bid approval. Example: We approve a bid for an estimated contract amount of $9 million, but the actual bid goes in at $8,500,000 due to last minute changes and reductions. Therefore, when the low bid results are reported, $500,000 in capacity is restored to the aggregate.

Postponements – sometimes bids are postponed at the last minute, with no immediate reschedule date. The bid approval may never be used. When a bid dies on the vine, we restore the capacity immediately.

Withdrawal – Sometimes clients decide not to bid a project after ordering the bid bond. They may have determined that the plans are unclear or unacceptable. Advise us so capacity can be restored.

If you are now sufficiently impressed with the importance of minding these small details, you may don your green eyeshade and declare yourself an Official Bean Counter. It’s not glamorous, but it is necessary for proper management of the bond account. (Actually, we think it’s glamorous!)

5 Essentials Of Hiring Logistics Services

Business in today’s world is so occupied with a large number of activities. From production planning to select brand campaign, leaves no time to focus on other core activities like logistics services. Business can only survive when their products and services are reaching the customer’s at large without any delay or stress.

Outsourcing work to 3PL services can reduce the burden of businesses to some level, leaving the business with plenty of time to focus on the other relevant tasks or activities. Lending task of storing and transporting goods to 3PL Company ensures cost and time management for business.

Here are a few benefits of having logistics services as your outsourcing partner.

1. The renowned network – The third-party logistics company have a huge network of transporters, warehouse services and much more, which benefits the business with a vast and pre-established chain of logistics network.

2. Adjustable needs – Business often has increasing needs. These services are alterable and can be adjusted according to the size and preferences of the future business. As they have pre-planned strategy and resources that can adhere to the growing business needs.

3. Unseen technology – These services have devised a technology and software that can make the logistics process easy yet convenient. From booking services online to tracking goods in transit, every process is made viable in one click.

4. Cost effective – Businesses often sit back and do not focus on the process of transferring and storing goods because of the huge cost involved in it. Setting up a warehouse and purchasing of transportations seems to be a very overly budget act. These logistic partners are very experienced and deal with multiple projects, provide services under the budget.

5. Time efficient – The 3PL company is professional and have ways to cater business extensively, their activities and resources are predefined which saves a lot of time. They transport goods with minimum cost and time.

Outsourcing the task of logistics to a very profound company or organization has become necessary in today’s time. Business alone cannot look after each and every activity, due to lack of expertise and knowledge. It takes a lot to establish a business of dream. Every business or metier is different and its needs are different too, lending the task to some professionals helps in saving time as well as cost. From unseen technology to well-known network, these services provide oceans of opportunity under one roof.