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Tim Geppert: Small Businesses Can Compete for Bonded Construction Projects


Having spent a career in and around the construction business, a strategy many small business owners consider is whether to bid on bonded projects. Government construction contracts typically require surety bonds so there is a large market opportunity. The good news here in the San Antonio area is that Bexar County and the U.S. Department of Transportation offer a free Bonding Education Program (BEP) to provide small and disadvantaged businesses the tools and resources required to compete for projects requiring a surety bond. The USDOT course covers many topics over the eight weeks, one night per week.

I had the honor, along with Daniel Koehl of RSM, to teach portions of the course recently. We had a group of 20 enthusiastic students made up of construction company owners and administrative staff. Our focus was Construction Accounting. Specifically, we educated the owners on how to prepare the Work in Progress (WIP) schedule and perform Percentage of Completion Project Accounting.

WIP Schedules

As successful business owners, they already grasped the general concepts well. Most are using QuickBooks software so do not have construction specific systems. Where they needed help was in better understanding how to gather and/or capture the data required to generate the WIP schedule. Daniel and I were able to walk through examples and help them understand what will be required of them. I am grateful to Daniel for preparing some of the examples and we both enjoyed interacting with the business owners.

Bonding

A second important part of the Accounting instruction was taught by Bill Gellhausen, a Surety Agent with USI. He focused on what financial information Sureties (bonding agents) need from Contractors. He also presented metrics used to judge the contractors’ financial strength. 

Banking

Because banking for construction businesses has some unique requirements, I also assisted in organizing a Banking Services panel. San Antonio commercial bankers explained the need to establish relationships with a bank friendly to the construction industry. They described the types of information banks require to consider extending credit to their clients. The students were very engaged, asking lots of good questions. Thank you to Mario Dominguez of the Bank of San Antonio, Glenn Thomas of Frost Bank, and John Cruz of Broadway Bank for sharing their time and expertise.

Conclusion

This was the first time I assisted in teaching this course and I thoroughly enjoyed it. The program is very on point and directly helps these business owners see that they could prepare their companies to go after bonded business. 

Aventine Hill CFO’s were proud to be a part of this mentoring process.

Posted by Tim Geppert, CFO Partner.

Learn more about our CFO Advisory Services.

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