Surety claims and performance bond claims involving contractor performance issues can become increasingly complex when deficiencies, construction delays and financial distress extend across multiple bonded projects. Identifying practical solutions that address construction issues while limiting unnecessary replacement costs can be critical to reducing a surety’s overall exposure.
YA Group was engaged to provide surety claim consulting for a surety facing a failing general contractor experiencing significant financial stress across a multi-project portfolio. Among approximately 200 performance bond claims involving the principal was a municipal park project with costly, unresolved drainage issues affecting its walkways.
Challenge Overview
Site inspection revealed significant grading discrepancies throughout portions of the park’s walkway. Some areas were approximately two feet off grade, with certain portions as much as six feet off grade, contributing to serious drainage issues and creating the potential for additional landscape and property damage.
The initial proposed solution called for complete replacement of the affected walkway, which would have resulted in substantial additional costs. The surety needed an alternative approach that could appropriately address the drainage deficiencies while reducing its potential losses.
The project also involved construction delay impacts and broader disputes related to the contractor’s performance, requiring construction delay analysis, technical analysis and support as the matter progressed toward resolution.
YA Group’s Area of Impact
Rather than replacing the existing walkways entirely, YA Group’s surety experts developed an alternative repair strategy involving a series of outlet drains strategically positioned throughout the park.
YA’s engineers collaborated with the obligee’s engineer and architect to develop, refine and implement the redesigned drainage approach without replacing the existing walkways, substantially reducing the scope of corrective work.
YA also worked with the general contractor to demonstrate construction project delay impacts and provided expert testimony in support of the surety and principal’s counsel. This technical analysis helped support mediation resulting in a recovery of more than $1 million in costs and lost profits.
Through the combination of an alternative engineering solution, construction delay analysis and expert support, YA Group helped reduce the surety’s estimated expected loss by approximately 50% while providing a practical resolution to the park’s drainage issues.
