How we can help our neighbors recover from Harvey and Irma
As we watch our neighbors in the gulf coast, and now Florida and the Caribbean, deal with disaster and loss we all look for ways to help or contribute to the recovery to help restore their quality of life.
One way to help is through the recovery and rebuilding process. As our neighbors seek to undertake a massive repair and rebuilding effort the one thing we can all do it to make that process work as efficiently and as productively as possible by leveraging modern technology resources and learning from past disasters.
There is hard work ahead as the traditional pattern of significant amount of recovery dollars for reconstruction, and the rebuilding of energy and transportation infrastructure, is being chased by too few contractors and favors large out of state contractors over local businesses where surety bonds can be a barrier.
The large volume of rebuilding contracts, public and private, can be overwhelming to administer, creates an opportunity for fraud and exposes public and private entities to contractor default that can worsen the loss and devastation.
If you want to help your neighbors, help them rebuild.
Leveraging Modern Technology
In the last few years construction industry stakeholders have made significant progress in modernizing their systems to support data interoperability for more efficient communication and data exchange, along with eliminating the burden of multiple stakeholder’s manually rekeying the same data.
Cloud infrastructure and data analytics are becoming more and more integral to construction, large and small, and across the entire supply chain including financial services, insurance/surety, and impacting project owners, public and private.
The transition to digital is disruptive, and often requires a compelling case to break from the status quo to examine and embrace new technologies that can move policies and procedures to the next generation of products and services that are better, faster and cheaper.
The devastation and need for massive rebuilding that is efficient, cost effective and protected against fraud is that compelling case.
Our neighbors in the Gulf Coast, Florida and the Caribbean are going to examine best practices for how they rebuild better, faster and cheaper, and all industry stakeholders need to contribute to bring modern best practices to the rebuilding effort to help them succeed.
We need to let go of polices and processes that are a burden instead of an asset.
For the surety industry this will be both a challenge and an opportunity.
For years I have personally advocated for the surety industry to transition to digital transactions, including data interoperability for financial and project data, and to shift from error prone, time and cost prohibitive manually prepared paper bonds to efficient error free electronic bonds introduced back in 2000.
I am fortunate that my employer, Wells Fargo, has not only been supportive of my personal community service effort to improve access to surety credit for small business through data interoperability, Wells Fargo has encouraged and cultivated my efforts with its Innovation Club, iWeek (Innovation Week), Startup Accelerator and Innovation Incubator to name just a few of the resources that have enabled me to engage with fellow team members across the spectrum to pursue my passion for making the surety product a gateway for opportunity, not a barrier to participation.
I am grateful for that encouragement and ready to contribute to our neighbors as they rebuild their lives and communities.
I am not alone; the surety industry has two trade associations that have done an amazing job of advancing data interoperability, the Surety and Fidelity Association of America (SFAA) and the National Association of Surety Bond Producers (NASBP) in collaboration with XBRL US have paved the way for secure, reliable data exchange utilizing open standards that will significantly impact efficiency in both the underwriting and claims process along with promoting innovation.
I encourage all surety professionals, and stakeholders that deal with surety bonds to engage in the industry effort to develop modern resources that data interoperability will enable, and to work quickly to bring the resulting efficiencies to our neighbors in need of efficiency.
Lessons Learned From Katrina - Surety
The traditional award for public works contracts requires the contractor to submit a paper surety bond guaranteeing their work and the payment of all obligations. This process of manually preparing the surety bond, along with its notary and power of attorney for all the original signatures is an expensive and burdensome bottleneck, both in the contractor executing the bond and in the agency receiving the bond to authenticate its validity. The paper bond denies the opportunity for digital administration unless the data is manually rekeyed by the public agency.
The historical manual process represents significant inefficiencies and excess cost given modern electronic bonds are better, faster, easier. They also provide for digital administration of the data for improved portfolio management, and provide easy access to the data contained in each surety bond.
After Katrina to improve efficiencies and to reduce the administration burden several Louisiana agencies transitioned to electronic bonding:
2009 2012 2017 Increase
Total National Number for Bid Bonds: 49 111 140 29
Total for Louisiana for Bid Bonds: 1 29 41 12
26% 29% 41%
What makes this significant is that the rest of the nation remained stuck in the status quo because that is the process they know, and there was no necessity requiring a change.
It is amazing to think that Louisiana represents 29% of the all the entities nationwide, and that over the last five years represented 41% of the increase of electronic bond adoption.
How Can You Help
Everyone needs to work together and collaborate on modernizing our construction process to leverage data interoperability enabled by open machine readable data standards, and we need to shift from talking concepts to implementing reality.
Together we can collaborate and create real solutions for our neighbors, and everyone who wants to help should get engaged and help create the next generation of policies and procedures with systems that utilize open standards to promote innovation and competition, resist short term proprietary solutions that constrain future options, and drop the paper bond and move right away to electronic bonds.
Where and When to get engaged
XBRL US / SFAA / NASBP / CFMA surety industry collaboration
September 19 – Sign up for a free one-hour webinar to learn more.
XBRL Surety Website
USDOE Orange Button – Construction of Solar Facilities
September 10-13 - Orange Button at Solar Power International
DOE Orange Button
Smart Electric Power Alliance/Smart Grid Interoperability Panel (SEPA/SGIP)
USDOT request for comments identifying unnecessary obstacles
September 26th – Tentative – Working group meeting on USDOT Comments
The USDOT recently sought comments on ways to reduce stakeholder burden on transportation projects.
XBRL-CET response was to implement machine readable data standards throughout the construction supply chain not only for transportation, but all federal contracts, and to prevent propriety solutions from being imposed.
Data Foundation – 2017 Data Transparency conference
Construction Industry Standards Group
September 28 AGC/CFMA Tech Forum
Associated General Contractors / Contractors Open Standards Alliance
Baseline to Build On
Construction Progress Coalition
Major disasters are disruptive in a very negative way.
We have an opportunity to be disruptive in a positive way.
Let’s get to work.
September 7, 2017