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June 28, 2023

How contract surety can help manage inflation and supply chain issues in construction

Dan Garvin

Construction projects are complex and require careful planning and execution. However, even the best-laid plans can be disrupted by inflation and supply chain issues. When challenges arise, successful contractors quickly adapt to minimize the impact on their project timeline and budget.

Here are some ways contract surety may help you overcome supply chain and inflation challenges on your next project.

Managing inflation

When inflation occurs, the labor, materials, and equipment costs can increase rapidly. This can put a strain on the contractor's budget.

Contract surety helps contractors manage the impact of inflation by providing a financial safety net. If inflation causes project costs to exceed the contractor's budget, a surety company may cover the additional costs. These costs can be up to the amount of the bond. This helps to ensure continuity without delay, even in the face of unexpected cost increases.

If you’d like to read more about the overall effects of inflation, visit our Business Insurance Trends hub and download our latest report today.

Managing supply chain issues

Materials or equipment that are delayed or unprocurable can disrupt project timelines. Contract surety can help contractors manage supply chain issues by providing a guarantee of performance. If the contractor cannot secure the necessary materials or equipment, the contract surety may ensure the project can continue without delay. Materials can be procured, the current contractor can be replaced, or the project owner can be reimbursed for financial loss.

In the world of construction, unexpected challenges are inevitable. However, with the right tools and resources, contractors can manage these challenges and ensure project success. Contact the Marsh McLennan Agency Surety team today to learn how we can protect your next construction project.