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ABOUT THE CLAIM
Guardian and YA Group’s surety consultants were recently called upon by a longstanding client. The surety’s claim manager wanted our team’s engineers to help them ascertain status on one of their bonded principal’s general construction projects. The project was a small municipal building located in the Pacific Northwest. The principal had chosen to self-perform the concrete work, and even though work had only commenced two month’s prior, reports from the obligee were that the foundation was wholly defective and deficient. While the principal hadn’t been terminated yet, both the obligee and the surety sensed a default was imminent.
ABOUT THE INVESTIGATION
A walk-through of the construction site confirmed what the surety had feared. While the investigation was underway, the principal filed for Chapter Seven bankruptcy. It was rapidly apparent to the surety team’s concrete expert that the mix and pour had not gone well, with signs of deficiency everywhere. Some of the observations included honeycombing of the surface, excessive slough, and even some of the tiebacks and embeds were incorrectly located. While the principal did, in fact, have prior concrete experience, what his company lacked was adequate skilled crew to pull off the job professionally. Insufficient supervision likely led to the problems mentioned above and concrete beam break tests later confirmed structural weakness. It was also readily apparent, from a review of the contract documents and the surety team’s knowledge of real-world costs, that the principal had underbid the project by about one million dollars.
ABOUT THE RESOLUTION
The concrete work represented approximately 20% of this particular project, and it had been performed so poorly that the concrete foundation would need to be broken up and the job completely redone. With the principal genuinely, indefensibly at fault and when the surety has so much at stake (in this case, the full penal value of the bond), it becomes the surety consultant’s duty to negotiate the best settlement it can. On this claim, an agreement with the obligee was “brokered” that enabled the city to move forward rapidly (a chief objective) while buffering the surety’s losses. At this point, the surety team’s experts were able to switch into recovery mode and help the surety recoup its losses.
ABOUT GUARDIAN & YA GROUP
Surety companies rely on the unique combination of technical engineering expertise and claims investigation savvy that can only be found at today’s YA Group. With the acquisition of Guardian Group, YA now offers clients a complete suite of surety support services. 700+ experts across the U.S., as well as in Mexico and England, stand ready to help you investigate and resolve claims effectively and efficiently. For your everyday contract and commercial claims, for a high volume of claims, and on up to surety claims involving some of the largest, most problem-fraught construction projects in the world, call upon unmatched experience, proven professionalism, and integrity. Call on the surety experts at YA Group today.