Why Do Contractors Fail?


Department:	Construction Bonds
Type:	White Papers
Construction is a complicated business that faces ever-changing conditions, and those who are not prepared or capable of meeting these demands may ultimately fail. According to BizMiner, of the 853,372 building (nonsingle-family), heavy/highway, industrial buildings/warehouses, hotel/motel and multifamily home construction, and specialty trade contractors operating in 2002, only 610,357 were still in business in 2004—a 28.5% failure rate. Every year thousands of contractors, whether in business for two years or 20, face bankruptcy and business failure. These firms leave behind unfinished private and public construction projects—and still worse, billions of dollars in losses to project owners and taxpayers. Public and private construction project owners can mitigate therisk of contractor failure by requiring bid, performance, and payment bonds. Surety bonds provide financial security and construction assurance to project owners by verifying that contractors are capable of performing the work and will pay certain subcontractors, laborers, and material suppliers. This is especially important on public projects where taxpayers’ dollars are at risk.

Cross Financial Corp., a Maine corporation headquartered in Bangor, Maine, operates a network of wholly-owned subsidiary insurance agencies with locations in Maine, New Hampshire, and Massachusetts. Each office is a separate legal entity, is separately managed and is independently operated as a wholly owned subsidiary of Cross Financial Corp., Bangor, Maine.