Why Does Project Experience Matter in Underwriting?

Direct answer

Experience is informative because it shows how an applicant has actually handled obligations of a comparable kind. It is not a qualification test, and it does not by itself determine whether a bond is issued.

What may be considered

• Nature of previous projects or engagements — how closely they resemble the proposed obligation.
• Size and complexity — whether the applicant has operated at a comparable scale.
• Experience of management and technical personnel — the people who will actually deliver, not only the entity''s history.
• Completion history — how past obligations were carried through.
• Relevance to the proposed obligation — a strong record in unrelated work answers less than a modest record in closely related work.

What this does not mean

• It does not mean a newly formed company cannot obtain a bond.
• It does not mean a fixed number of years in business is required.
• It does not mean a specific number of completed projects is required.
• It does not mean experience automatically determines approval.

An applicant with limited corporate history may still be able to present relevant personnel experience, organised records and a clearly defined obligation. What a Surety makes of that depends on the circumstances and its own underwriting requirements.

How experience sits alongside capacity

Experience and capacity are related but distinct. Experience speaks to whether the applicant has done this kind of work; capacity speaks to whether it can do this particular obligation now, given everything else it has on. See How Does a Surety Assess the Applicant''s Capacity? and What Does a Surety Company Look for in an Applicant?.

Practical points

• Keep a clear record of completed work, scope, values and roles.
• Identify the personnel who will be responsible and their relevant background.
• Present experience that genuinely relates to the proposed obligation rather than a long undifferentiated list.

Key considerations

Evaluation, underwriting, documentary requirements, financial assessment, collateral requirements, terms, premium, approval and issuance remain functions of the applicable insurer or Surety. SuretyPH does not underwrite applicants, calculate bonding capacity, assign risk scores, set premiums, determine collateral, approve or decline applications, determine final bond terms or issue bonds.