An Administrator's Guide to California Private School Law

Chapter 17 – Construction

C. E VALUATING S UFFICIENCY O F S URETY B ONDS Upon receipt of a surety bond from a contractor, the school should evaluate the financial strength of the surety company that issued the bond and determine whether the bond meets the contractual and other statutory requirements. In conducting such an evaluation, the school should consider the following:

 Admitted Status: Ensure the surety is licensed and authorized to issue bonds. If a surety company is not an “admitted surety insurer” and the surety defaults or becomes insolvent, the school may have to cover claims of subcontractors in the case of a payment bond. In the case of performance bond, the school may have little or no recourse of recovery if the surety company becomes insolvent.  Financial Strength: The discussion in Section 6 of this chapter regarding checking the financial strength and rating of insurance companies applies to sureties.  Compliance with Statutes: Make sure the bonds comply with statutory requirements, if applicable, before accepting the bonds.  Compliance with Contract Terms: Make sure the bonds comply with the requirements in the contract documents.

A DMINISTRATION O F C ONTRACT

Section 8

A. C HANGE O RDERS Most construction contracts establish an agreed upon amount of days for the contractor to perform and complete the work and amount the school will pay the contractor for full construction and completion of the project. Changes, however, can arise due to unforeseen site conditions, problems with the plans and specifications, post-contract modifications requested by the school, or many other reasons. These changes typically result in additional work by the contractor, at an additional price, and could add days, weeks, or months to the project’s completion date. Contractors will usually issue a change order request to the owner for approval when extra work becomes necessary. A change order is a change or amendment to the contract documents agreed upon by the school and the contractor. Change orders are typically agreed to by both parties in writing. A private construction contract, however, can be modified by an oral agreement between the parties. 2353 Schools should ensure their construction contract establishes a procedure for processing change orders and requiring the school’s written approval of a change order request by the contractor. This will help limit the school’s liability for oral agreements made by an unauthorized school agent or employee. Oral agreements will generally not be enforceable if the parties’ construction contract prohibits oral modifications. 2354 Schools are best protected by ensuring the contract identifies that the school’s

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