Contractor Capacity: The Oft Neglected Third C


Anyone who has dealt with surety has come across a reference to the three Cs of underwriting:

  1. Capital
  2. Character
  3. Capacity

These three criterion have been constants of the surety industry since its inception.

  1. Capital is the most commonly discussed and the easiest C to understand. Contactors need to have sufficient capital to finance their construction activities. They need adequate liquidity to pay their suppliers and subs, the cushion to do so if there is a delay in compensation, and the ability to deal with unforeseen obstacles that can arise during a project.