Surety's Role in Alternate Delivery Methods

Why Early-Phase Involvement Matters

In traditional design-bid-build delivery, bonding typically comes into play once a contractor is awarded the project (unless the owner requires a bid bond). Collaborative delivery methods operate differently.

Because contractors contribute to scope development, budgeting, constructability reviews, and design coordination, their responsibilities begin much earlier than they do on traditional projects. Owners rely on this early involvement to establish project direction, manage risk, and control costs.

While bonding generally applies once construction obligations are established, the decisions made during early phases—such as how scope is defined, risk is allocated, and teams are structured—directly influence how smoothly bonding can be obtained later.

Bonding attaches once a contractor assumes contractual responsibility for construction performance and payment—not during planning or advisory phases, even when early services are underway.

How Bonds Apply to Alternative Delivery Models

One point of confusion in alternative delivery is the assumption that new delivery models require new or different bond types. In reality, the bond categories remain the same.

• Bid Bonds
• Performance Bonds
• Payment Bonds
• Warranty or Maintenance Bonds (when required)

What changes is who is bonded, when bonding is required, and what contractual obligations the bond guarantees. Delivery method shapes risk allocation and bond language—not the existence or creation of new bond types. See table below.

Owners may request bonding structures that extend beyond standard surety practice. Early coordination between the owner, contractor, agent, and surety helps align expectations and avoid delays once construction contracts are finalized.

1. Design-Build Bonds

Design-build combines design and construction under one contract, which means the surety is backing performance across the full scope of that agreement once it is executed.

From an underwriting perspective, sureties focus on:

• How the contractor and design professionals are structured as a team
• Who is responsible for design accuracy and coordination
• How evolving design documents affect scope and pricing 
• The contractor’s experience managing design-related risk

On design-build projects involving joint ventures or single-purpose entities, sureties also evaluate ownership structure, indemnity support, and how responsibility is shared among team members.

Typical bonds include:

• Bid Bonds, when required by the owner
• Performance Bonds, guaranteeing completion of the design-build contract
• Payment Bonds, covering subcontractors, suppliers, and often design subconsultants

Performance bonds do not replace professional liability insurance. Sureties do not insure professional malpractice. Errors and Omissions coverage remains the primary protection for true design errors, while the bond responds to contractual performance obligations.

For owners, a bonded design-build team provides reassurance that the entity responsible for design decisions is also accountable for delivering the project.

2. CM-at-Risk Bonds

Under a CMAR approach, the contractor first provides advisory and coordination services and later commits to delivering the project under a guaranteed maximum price (GMP).

Bonding typically applies once the CM assumes construction responsibility and includes:

• Performance Bonds, guaranteeing construction completion and GMP compliance
• Payment Bonds, protecting trade contractors and suppliers
• Bid Bonds, often required at the trade contractor level

Because the CM ultimately guarantees cost and completion, bonding plays an important role once construction risk is assumed— particularly on public projects.

Design responsibility remains with the architect or engineer under a separate contract and is not transferred to the CM or the surety.

3 Red Flags Sureties Watch for in Design-Build and CMAR Projects

1. Unclear or expanded design responsibility

When contracts blur the line between design coordination and design liability, sureties may be exposed to professional risk they did not intend to assume.

2. Weak GMP structure or cost controls

In CMAR projects, the GMP is central to risk evaluation. Poorly defined terms, incomplete scopes, or limited contingency can raise concerns.

3. Bond forms that extend liability beyond the contract

Customized bond forms that expand coverage, eliminate standard defenses, or introduce uncapped damages can materially affect surety risk.

Why This Matters for Contractors

Bonding in alternative delivery reflects a contractor’s readiness to manage complex project structures. These projects can also require more bonding capacity than traditional delivery methods, making transparency and early communication especially important.

• Compete for a broader range of projects
• Demonstrate professionalism and financial strength
• Build trust with owners during early, high-impact phases
• Showcase strong internal processes and collaboration

The Bottom Line

 Design-build and CM-at-risk projects work best when the entire surety team—agent, underwriter, and contractor—is aligned early. These delivery methods don’t change the type of bonds being issued, but they do change how risk is evaluated, often involving different team structures, earlier contractor involvement, and contracts that shift responsibility in new ways. Underwriters take a closer look at who is responsible for what, how costs and schedules are managed, and whether the contract matches the bond being requested. In this environment, the agent’s role becomes even more critical—agents who understand these delivery methods can help coordinate conversations early, set clear expectations, and keep the process moving smoothly once construction begins

Bonding remains tied to construction obligations—not early advisory services. However, decisions made during early project phases can directly influence how smoothly bonding is obtained later. As delivery methods become more collaborative, contractors who understand this relationship—and partner with a surety that understands alternative delivery risk—can reduce friction at award, strengthen owner relationships, and pursue new opportunities with confidence.