The Experts below are selected from a list of 48351 Experts worldwide ranked by ideXlab platform

Douglas D. Gransberg - One of the best experts on this subject based on the ideXlab platform.

  • Performance Bond: Cost, Benefit, and Paradox for Public Highway Agencies
    Transportation Research Record, 2014
    Co-Authors: Elizabeth Kraft, Heedae Park, Douglas D. Gransberg
    Abstract:

    In the highway industry, one of the main methods to prequalify a contractor is to determine if a Performance Bond can be secured from a commercial surety. The current Performance Bonding system does not differentiate between high-performing and marginal contractors. Two companies with the same level of financial assets have the same capability to furnish Performance Bonds. This paper details an analysis of the benefits and costs of Performance Bonds and reports the results of a study that used case studies in five state departments of transportation (DOTs): Iowa, Oklahoma, Utah, Virginia, and Washington. Structured interviews were also conducted with members of the construction contracting sector and the surety industry. The results showed that although average default rates were less than 1.0% and a Performance Bond added an average of 1.5% to the cost of every construction project, DOTs and contractors were reluctant to eliminate Performance Bonds from the industry. There lies a paradox: construction project owners are willing to pay an additional 1.5% to protect themselves from an event that occurs less that 1.0% of the time.

Fazil T. Najafi - One of the best experts on this subject based on the ideXlab platform.

  • Performance Bond Benefit-Cost Analysis
    Transportation Research Record, 2011
    Co-Authors: Lorena Myers, Fazil T. Najafi
    Abstract:

    A Performance Bond provides the assurance that an awarded construction project will be satisfactorily completed in the event that the contractor is unable to complete the project as agreed and the contract is terminated. First passed into U.S. law in the late 1800s, Performance Bonds protect against financial losses. The ability of contractors to provide a Performance Bond has mistakenly been assumed as a guarantee that contractors will perform well on the projects they are awarded. Indications are that there is a need to evaluate the benefits and the costs of using Performance Bonds. This paper examines the benefit-cost ratios of Performance Bonds on a national basis. Analysis was performed on state construction project data collected for contract awards from September 2007 to September 2009. The results of the analysis suggest that states with a small number of defaults, or none at all, did not benefit from having Performance Bonds, whereas those states with numerous defaults did benefit. In conclusion,...

Elizabeth Kraft - One of the best experts on this subject based on the ideXlab platform.

  • Performance Bond: Cost, Benefit, and Paradox for Public Highway Agencies
    Transportation Research Record, 2014
    Co-Authors: Elizabeth Kraft, Heedae Park, Douglas D. Gransberg
    Abstract:

    In the highway industry, one of the main methods to prequalify a contractor is to determine if a Performance Bond can be secured from a commercial surety. The current Performance Bonding system does not differentiate between high-performing and marginal contractors. Two companies with the same level of financial assets have the same capability to furnish Performance Bonds. This paper details an analysis of the benefits and costs of Performance Bonds and reports the results of a study that used case studies in five state departments of transportation (DOTs): Iowa, Oklahoma, Utah, Virginia, and Washington. Structured interviews were also conducted with members of the construction contracting sector and the surety industry. The results showed that although average default rates were less than 1.0% and a Performance Bond added an average of 1.5% to the cost of every construction project, DOTs and contractors were reluctant to eliminate Performance Bonds from the industry. There lies a paradox: construction project owners are willing to pay an additional 1.5% to protect themselves from an event that occurs less that 1.0% of the time.

Lorena Myers - One of the best experts on this subject based on the ideXlab platform.

  • Performance Bond Benefit-Cost Analysis
    Transportation Research Record, 2011
    Co-Authors: Lorena Myers, Fazil T. Najafi
    Abstract:

    A Performance Bond provides the assurance that an awarded construction project will be satisfactorily completed in the event that the contractor is unable to complete the project as agreed and the contract is terminated. First passed into U.S. law in the late 1800s, Performance Bonds protect against financial losses. The ability of contractors to provide a Performance Bond has mistakenly been assumed as a guarantee that contractors will perform well on the projects they are awarded. Indications are that there is a need to evaluate the benefits and the costs of using Performance Bonds. This paper examines the benefit-cost ratios of Performance Bonds on a national basis. Analysis was performed on state construction project data collected for contract awards from September 2007 to September 2009. The results of the analysis suggest that states with a small number of defaults, or none at all, did not benefit from having Performance Bonds, whereas those states with numerous defaults did benefit. In conclusion,...

Peter N. Posch - One of the best experts on this subject based on the ideXlab platform.

  • Quality Signalling and Ratings Credibility: Regulatory Reform for the Ratings Industry
    SSRN Electronic Journal, 2010
    Co-Authors: Peter N. Posch, Roger J. Bowden
    Abstract:

    Financial regulators can enhance the credibility of credit ratings if agencies are offered a registration facility that sequesters part of their fee as a Performance Bond over a designated maturity. The margin can be responsive to the rating, the defined credit event, and the registration maturity. Agencies can signal their private information by choosing whether or not to register and stake part of their fee. The value of the registration real option determines the amount that is spent by the issuer on the incremental quality of research required. The framework can also inform margin and penalty setting by regulators; while an ex ante choice to register is a potential defence in professional liability litigation.

  • Certification and quality signalling: regulatory reform for the ratings industry
    2010
    Co-Authors: Roger J. Bowden, Peter N. Posch
    Abstract:

    In financial contexts such as credit rating and carbon trading, information provision has effectively become certification, highlighting the systemic importance of whether the information is fit for the intended purpose. System regulators can enhance the credibility of information signalling if agencies are offered a registration facility that sequesters part of their fee as a Performance Bond. Agencies can then signal the value of the rating by choosing whether or not to register and stake part of their fee. A real option analysis can be used to value the registration choice, and hence the amount that is spent by issuer on the incremental quality of research required. The framework can also inform margin and penalty setting by regulators; while an ex ante choice to register is a potential defence in professional liability litigation.