The document discusses the changing political and economic climate in the Midwest United States. It notes that DSP acquired Willis' Schaumburg commercial and surety operations and hired Kirk Liskiewitz and others, expanding DSP's expertise. It predicts opportunities for construction clients in 2015/16 if they carefully select projects and partners due to tight labor markets and stretched subcontractors.
Architecture, Engineering & Construction Seminar - 2014
Kirk Liskiewitz Joins DSP Surety Team
1. Kirk Liskiewitz
Vice President of Surety Operations
The winds of change have blown across the Midwest in 2015. February
became the coldest month on record. The Republicans now control the
House, Senate, and Governor’s mansion. In January, DSP acquired Willis’
Schaumburg commercial and surety operations and our clients’ backlogs
have reached levels not seen in the past five years!
Needless to say Al Gore’s climate change proposition is not proving true
throughout our region. The political landscape is changing and just possibly
Illinois can catch up to our progressive neighbors in Indiana, Iowa and
Wisconsin. Bruce Rauner and Rahm Emmanuel have uphill fiscal battles as
Chicago came one step closer to junk bond status in late February.
The good news – construction spending is up and the oil glut is stimulating
consumer spending. At the recent IRTBA convention, the economic forecast
speaker Bob Frentzel of The Private Bank mentioned that for every “one
penny” that gasoline drops at the pump, an additional BILLION dollars
is generated for consumers to spend. With our economy 70% dependent
upon the consumer, this is a huge economic driver – autos, appliances,
home buying and ultimately construction are all benefiting from the drop in
gasoline prices.
DSP’s recent hiring of Kirk Liskiewitz from Chubb Surety and our acquisition of
the Schaumburg Willis Commercial and Surety teams adds a new dimension
to our organization. Please welcome Kirk, John Adams, Bob Mielke and
Jerry Olson to the DSP family along with their professional support teams.
This experienced group of construction experts on both the insurance and
surety sides of the business provides great synergy with our carrier and
client bases.
We see great opportunities in 2015/16 for our construction clients. While
margins are ever so slowly moving up, work appears to be more plentiful.
The issue now is picking and choosing not only the right opportunities to
bid and negotiate, but also the firms that you align yourself with to achieve
success. Labor and quality subcontractors are stretched thinly at this time.
Maximizing your upside while mitigating your company’s downside are the
keys. Please reach out to us for any assistance in this regard.
Wishing you a safe and successful 2015 construction season!
Jim Sulkowski
President of Surety Operations
SURETYREPORT
Issue 7.1 | April 2015
13 Early Warning
Signs of Trouble
Page 3
April 2015Welcome!
Kirk graduated from Xavier University in
Cincinnati, Ohio with a BSBA degree in
accounting and earned his Certified Public
Accountant designation. After working in
the accounting profession for 6 years, he
transitioned into the surety industry with
Chubb surety and has been in the industry
since.
While working in the surety industry, Kirk
has worked with construction customers
with revenues ranging between $10 million
and $3 billion. Kirk has actively serviced
customers across the country handling their
domestic and international needs. Kirk’s
extensive construction industry experience
enhances DSP’s ability to provide the very
best service to our customers.
Currently, Kirk is the Vice President of the
Surety Association of Indiana, a board
member of the Chicago chapter of the
Construction Financial Management
Association and holds committee posts
for both organizations along with the
Illinois Road and Transportation Builder’s
Association.
Please welcome Kirk to the DSP team!
A Publication of DSP Insurance Services
Understanding Different
Types of Surety Bonds
Page 2
2. 2 Surety Report 7.1
Contractor Profile
Roy Strom Excavating & Grading Co.
LOCATION: Maywood, Illinois
FOUNDED: 1944
CEO: Roy Strom
PRESIDENT: Dale Brooks
VICE PRESIDENTS: Mark Parus & George Strom
REVENUE: $22,000,000
AVERAGE # OF FIELD EMPLOYEES: 30
OFFICE PERSONEL: 6
LARGEST PROJECTS COMPLETED:
1. 108 N. State Street $14,800,000
2. Soldier Field $7,500,000
3. New City $6,300,000
MISSION STATEMENT: The mission of Roy Strom Excavating &
Grading Co. is to provide the highest quality of service to our
customers while striving to perform projects timely, safely, and within
budget. Having successfully completed some extremely difficult and
extraordinary excavation projects throughout our history, we strive to
use our experience to bring value to our customers that is above our
competition.
CORE VALUES: Integrity, Quality, Safety, Respect, Professionalism
DSP RELATIONSHIP: “Our company has a 16 year relationship with
DSP in both the insurance and surety bond areas. Their expedient
and personal attention in responding to our needs has gone well
beyond normal expectations from any business. Their response to
our surety needs and the relationship that DSP has established with
their carriers has been a cornerstone to our professional needs. Their
genuine concern about our company’s success sets them apart from the
competition.
Understanding Different Types of Surety Bonds
A Bid Bond provides
financial assurance that the
bid has been submitted in
good faith. The contractor
intends to fulfill his/her
responsibilities at the
price bid and will provide
necessary performance
and payment bonds.
A Performance Bond
protects the project owner
from financial loss if the
contractor fails to perform
the duties outlined in the
contract.
A Payment Bond
guarantees that the
contractor will pay
subcontractors and
laborers, and for supplies
relating to the project at
hand.
COMPANY
REPRESENTATION
SURETY DEPARTMENT
THE DSP ADVANTAGE
Steve Pohl
Partner
Jim Sulkowski
Surety Operations
President
Kirk Liskiewitz
Surety Operations
Vice President
Bob Kappus
Surety Producer
Mike Pohl
Surety Producer
Carol Dougherty
Surety Manager
Sherene Hemler
Account Executive
Meredith Mielke
Customer Service
Representative
Founded in 1981, DSP
represents the premier
regional and national
surety companies.
Our relationships with
these companies, like
our relationships with
our clients, are long
term. The reasons -
technical expertise, our
commitment to service,
and foremost, integrity.
With one of the largest
and most experienced
staffs in the
Chicagoland region,
DSP is positioned to
successfully grow with
your company. DSP
currently represents
over 150 Midwestern-
based construction
companies and
suppliers through our
network of national
and regional surety
companies.
3. 3DSP Insurance Services
Surety Tips: 13 Early Warning Signs of Trouble
Reasons Why Subcontractors Fail
Managerial Problems
• Inadequate accounting,
project management
systems
• Management or
personnel changes or
complications
• Business strategy changes
• Rapid over-expansion
Labor and Material Problems
• Shortage of labor and
materials
• Unrecovered cost
escalations
Uncontrollable Factors
• Lead contractor on a
different job does not
pay
• Severe weather
hindrances
• Unexpected economic
failures
• Difficult contract terms or
working conditions
FEWER PEOPLE ON THE JOB The inability to adequately staff a job could mean your
contractor is undercapitalized.
BACK OFFICE PROBLEMS Beware when the following are not provided timely: submittals,
scheduling information, suppliers to be used and schedule of
values.
REQUESTS FOR ADVANCED
OR EARLY PAYMENTS
This could mean poor cash flow.
POOR MAINTENANCE
OF EQUIPMENT
Companies with weak balance sheets can’t afford to reinvest.
DISSUADING YOU FROM
OBTAINING A BOND
This could mean lost surety support or inability to qualify for a
bond because of poor financial condition.
SUBCONTRACTOR OR
SUPPLIER PAYMENT DEMANDS
Beware when sub-subcontractors or suppliers of a subcontractor
are demanding payment directly from you.
UNJUSTIFIED CHANGE ORDERS Is the contractor continuously trying to increase their contract by
claiming additional work is needed when it is not?
RELUCTANCE TO
PROVIDE REFERENCES
If references for recent work are not readily available, this
could be a sign that their business is trending downward.
OVERLY AGGRESIVE BIDDING Desperate people do desperate things; and zero margin work is
a recipe for disaster
ANOTHER WAIVE OF LAYOFFS We’ve all had layoffs but a 3rd or 4th layoff could mean
added trouble.
DISGRUNTLED PEOPLE Listen to the various workers on your job. Overly disgruntled
workers could mean their employer is having problems.
LOSS OF GOOD PEOPLE Find out why a good employee left. Is it because his/her former
employer was having problems?
THE “RUMOR” MILL While much can be dismissed as gossip, sometimes where there
is smoke, there is fire.
Today, more than ever, you need to look for warning signs. While relationships
with contractors and suppliers are important to success in the construction indus-
try, keeping a skeptical eye and protecting your company should always be your
first priority. DSP would be happy to help you mitigate this risk.
As the economy and construction industry begin to show signs of life, please be
aware that it doesn’t mean everyone is out of the woods. The recession was deep
and contractor insolvency is still a very real threat. Here are some early warning
signals you should look out for.
4. SURETYREPORTD S P I n s u ra n c e S e r v i c e s
w w w.d s pi n s . c o m
DSP Insurance Services
1900 E. Golf Road
Suite 650
P 847.934.6100
F 847.934.6186
www.dspins.com