May 16, 2020

How Safety Performance Makes Getting Bonded Easier and Cheaper

Health and safety
Management & Planning
4 min
How Safety Performance Makes Getting Bonded Easier and Cheaper
Every contractor knows that safety in the construction field isnt just about getting protection hats. It extends to all aspects of a projects execution...

Every contractor knows that safety in the construction field isn’t just about getting protection hats. It extends to all aspects of a projects’ execution, and the well-rounded management and safety maintenance of a company.

That’s why safety performance is a major factor in obtaining a lower surety bond cost - or even getting bonded at all. 

Considering the importance of contract bonds for contractors’ ability to work on public projects, safety performance becomes an even more significant point on construction companies’ agendas. This means everything from employer and public safety to safeguarding of equipment and property.

Let’s go through the major ways in which safety affects contractors’ bonding. Higher safety performance means:

A Solid Financial Base

Accidents and low safety standards negatively affect the reputation and financial status of a construction company. This goes beyond direct compensations for specific mishaps, as it impacts the liquidity and net worth of the firm. How, you might ask?

For example, insufficient training of personnel is a major reason for injuries and also for serious project delays. Sound safety culture and policy that includes adequate employee training and information, as well as monitoring and evaluation of risks would prevent such situations. This, in turn, minimizes the chances of accidents and ensures timely project completion, both of which mean preventing financial losses too.

There is another take on the link between safety performance and stable finances that contractors should not forget. Besides direct costs for actual accidents and project delays that result from such mishaps, there are further costs involved if risk is not managed properly by contractors.

These are the hidden costs of an accident that include OSHA citation and higher insurance costs, as well as the need to recruit new employees and to replace damaged equipment. All of these are considerable - and unnecessary expenses that can cause serious harm to a contractor’s reputation in the field and, of course, to the company’s profit.

How does the financial status tie in to the bonding process? Well, to underwrite a bond, a surety company reviews the stability of a contractor from all corners.

This includes the strength of the company’s safety program to prevent accidents, its ability to manage potential pending claims if such occur, and its overall financial health. In many intricate ways, safety and financial stability go hand-in-hand.

Easier bonding process

During the bonding process, a surety company needs to make sure that the construction company in focus meets a variety of financial and safety requirements.

It reviews a myriad of factors, including the current balances, profitability, workforce capacity, ability to meet project deadlines and to fulfil contractual obligations towards employees and subcontractors.

The goal of this detailed examination is to get a clear idea whether the contractor is able to meet all requirements of a project in a timely and quality manner.

Naturally, complete compliance with all necessary points comes with adequate safety management. When a sound safety program and active safety education for personnel are in place, the risk of accidents is minimized. This means workforce capacity is expected to be steady, and the probability for fulfilling obligations - on time - is much higher.

Without assurance that a contractor meets all requirements and potential obstacles, a surety company cannot provide the needed bonding. The reason is that a surety bond, in fact, is a form of credit given to the contractor. Thus the surety provider operates as if giving a line of credit, so the requirements are strictly set.

Lower costs for bonding

The safety performance of a contractor is a major factor, not only in their ability to get bonded, but also in the surety bond cost.

When a surety company is assessing whether to underwrite a bond for a company, they are measuring the risk that it presents on all levels. Once it’s deemed that the bond will be provided, the level of the premium is determined to a large extent on the same principle.

Of course, the foremost consideration is the financial status of the contractor. Profit, growth, debts and claims are all determinants in the formation of the bond price. If a contractor is considered high-risk, she’ll have to spend more on the bond.

However, as we discussed earlier, stable finances are not possible without a sound safety policy and a good reputation with institutions, partners and clients. Thus, safety performance affects quite directly the bond price that you will have to pay in order to get bonded and be able to undertake a new project.

We hope that this overview makes clear the strong link between safety performance and surety bond costs. After all, a good safety record and a sound safety policy are musts for getting bonded - and for getting a lower bond price.

What is your experience with safety and bonding? We’d love to hear about it in the comments section below.

Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping contractors get bonded and start their business.

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Jul 29, 2021

Environment Agency clamps down on plastic films and wraps

Dominic Ellis
3 min
Environment Agency aware of plastic film and wrap from the construction and demolition sector being illegally exported

Businesses in the waste and construction industries must ensure they deal with waste plastic properly to stop illegal exports, the Environment Agency (EA) has warned. 

The warning comes as the Agency is increasingly aware of plastic film and wrap from the construction and demolition sector being illegally exported. 

Exports are frequently being classified as ‘green list’ waste of low risk to the environment, but are often contaminated with materials such as mud, sand, bricks and woodposing a risk to the environment and human health overseas, and undermining legitimate businesses in the UK seeking to recover such waste properly.

During the last year, the EA has intercepted shipments to prevent the illegal export of this material on numerous occasions. The Agency inspected 1,889 containers at English ports and stopped 463 being illegally exported. This, combined with regulatory intervention upstream at sites, prevented the illegal export of nearly 23,000 tonnes of waste.

Those convicted of illegally exporting waste face an unlimited fine and a two-year jail sentence. But construction firms could also face enforcement action if contaminated construction and demolition waste plastic is illegally exported.

Malcolm Lythgo, Head of Waste Regulation at the Environment Agency, said it is seeing a marked increase in the number of highly contaminated plastic film and wrap shipments from the construction and demolition industry being stopped by officers.

“I would strongly urge businesses to observe their legal responsibility to ensure waste is processed appropriately, so we can protect human health and the environment now and for future generations. It’s not enough just to give your waste to someone else - even a registered carrier. You need to know where your waste will ultimately end up to know it’s been handled properly. We want to work constructively with those in the construction and waste sectors so they can operate compliantly, but we will not hesitate to clamp down on those who show disregard for the environment and the law.”

There are a number of simple, practical steps that businesses can take to ensure that C&D site waste is handled legally.

Construction businesses should check what’s in their waste

  • Different waste types need different treatments and so must be correctly categorised to ensure it goes to a site that is authorised to handle it safely. Businesses can also check if their waste is hazardous as different rules might apply.
  • If you are removing the waste yourself, you must be a registered waste carrier- registration can be carried out here. When a waste collector is transporting your site waste, you must check they have a waste carrier’s licence from the EA.
  • You must also check that the end destination site any waste is taken to is permitted to accept it and has the right authorisations in place. Keep a record of any waste that leaves your site by completing a waste transfer note or a consignment note for hazardous waste which record what and how much waste you have handed over and where it is going.

Waste management industry must adhere to export controls

  • Contaminated C&D waste plastic - including low-density polyethylene (LDPE) wrap and film - must be exported with prior consent from the EA as well as competent authorities in transit and destination countries.
  • Those involved in the export of such waste must ensure that it meets the requirements set under the relevant export controls, such as being almost free-from contamination; the destination sites are appropriately licensed to receive and treat the waste; and waste is correctly managed once received.

The EA will continue to actively target those who export contaminated C&D plastic waste illegally, including any accredited packaging exporters who issue Packaging Waste Export Recovery Notes (PERNs) against such material in breach of their Conditions of Accreditation.

Businesses involved in the shipment of waste are required to take all necessary steps to ensure the waste they ship is managed in an environmentally sound manner throughout its shipment and during its recycling.

Anyone with information regarding the illegal export of waste including C&D waste plastics can contact the EA’s Illegal Waste Exports team at: [email protected] or anonymously via Crimestoppers on 0800 555 111 or via their website 

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