Chapter 25 — Further Reading

Sources grouped by the book's three citation tiers. Tier 1 is verified canonical material (statutes, institutions, named public events) you can stand behind; Tier 2 is real, attributed practice and literature whose exact specifics should be checked against current sources; Tier 3 is the chapter's constructed teaching material. Insurance has fewer "named cases" than a courtroom field — much of what follows points you to statutes, professional bodies, and public events rather than to individual rulings.

Tier 1 — Verified canonical

  • The Miller Act (U.S. federal law requiring performance and payment bonds on federal construction contracts above a statutory threshold) and the state "Little Miller Acts." The statutory backbone of contract surety on public work — and the reason a large share of public construction cannot proceed without a surety. Read the statute itself for the bond requirements and the payment-bond remedy for subcontractors.
  • The Surety & Fidelity Association of America (SFAA) and the National Association of Surety Bond Producers (NASBP) — the principal industry bodies for surety. Their public materials explain the bond types, the three-party structure, the role of indemnity, and the contractor-prequalification function in authoritative, practitioner terms.
  • The Institutes (American Institute for CPCU) — AINS, AU, and CPCU curricula treat surety as a distinct line; the professional bodies define the working vocabulary (principal/obligee/surety, the three C's, the bond families) used in this chapter.
  • The collapse of Carillion plc (2018) and the report of the UK House of Commons joint inquiry (the Business, Energy and Industrial Strategy and Work and Pensions Committees) — the detailed public record of a major construction-and-outsourcing firm's failure, and a case study in the financial and managerial warning signs a surety underwrites against. (Case Study 1; all specifics kept qualitative.)
  • The 2007–2009 financial crisis and the contraction of the U.S. mortgage-origination industry, together with the post-crisis strengthening and standardization of mortgage loan originator licensing and bonding (the nationwide licensing system for originators is the visible institutional legacy). Public, documented context for how a high-volume class of commercial-surety license bonds can be stress-tested by an industry-wide shock. (Case Study 2; framed as a labeled composite, no invented figures.)

Tier 2 — Attributed, specifics unverified

  • Industry guidance on contractor financial analysis for bonding — the working capital, net worth, backlog, and bank-line framework; the quality-adjustments to working capital (related-party receivables, aged receivables, job-specific inventory); and the rough working-capital multiples used to size programs. These practices are standard and well attested across surety and construction-accounting literature, but the specific multiples and thresholds vary by surety and by the cycle and must be checked against current practice — they are starting points for judgment, never formulas.
  • Construction-accounting references on the percentage-of-completion method and the work-in-process schedule — the basis for reading a contractor's real, job-by-job earnings and over/underbillings. The method and its underwriting significance are standard; the detailed mechanics are an accounting subject in their own right.
  • Surety-market commentary on the cyclicality and correlation of surety losses — the pattern that surety losses are lumpy, tied to the construction economy, and concentrated rather than steady, and that the surety market itself periodically hardens after waves of contractor defaults. The pattern is widely understood; specific historical loss magnitudes change by source and should be verified.
  • General reference works on commercial lines that cover surety (e.g., broad property-casualty and commercial-insurance surveys) — useful for placing surety alongside the insurance lines and for the taxonomy of commercial-surety bond types; treat specific figures with the usual caution.

Tier 3 — Illustrative / constructed

  • The Harbor Steel & Fabrication Underwriting File (the surety adjacency: Harbor Steel as a hypothetical bond principal if it bid public work; its working capital, backlog, bank line, owner's character and indemnity) — constructed teaching material, realistic but not drawn from any real account.
  • The worked teaching examples in this chapter — Figure 25.1 ("Two contractors, one bond request"); the two-structures side-by-side diagram; the contract-surety sequence diagram; the three-C's table; the commercial-surety map; and the "anatomy of a performance-bond loss" diagram. All dollar figures, programs, ratios, and loss amounts are illustrative round numbers chosen to make the credit logic legible, not real data.

If you read only one thing: the Miller Act (and your state's Little Miller Act) together with the public explanatory materials of the SFAA / NASBP. Between the statute that requires the bonds and the industry bodies that explain how the three-party guarantee and the contractor-prequalification function actually work, you will have the legal foundation and the practitioner framing of contract surety in a single sitting — and you will see, in plain terms, why the underwriter on these files is a lender wearing an insurer's badge.