MDA Model Contractor Programs preps business for success

Bob Covington

Bob Covington

Each time there are major state or federal construction projects in the state, there is an opportunity for minority contractors to obtain a share of the work set aside for minority business through the SBA 8(a) Business Development Program.

The Mississippi Development Authority (MDA) Model Contractor Program is designed to help minority businesses be better prepared to win SBA 8(a) contracts, as well as other business

“The Model Contractor Program has become one of our flagship programs and one of the most demanded services that we provide,” said Bob Covington, director of MDA’s Minority and Small Business Development Division. “Each year, we look to enhance it or tweak it in order to keep it fresh, but it is already, without a doubt, the most comprehensive and valued program that we offer.”

Covington said the Model Contractor Development Program was developed by the Surety & Fidelity Association (SFAA) and is composed of two interrelated components. A certificate of completion is given to each participant meeting the attendance requirement. The emphasis is construction centered, but is applicable to all businesses. Approximately 40 percent of those attending are not in the construction industry.

“We approach the model contractor development program from the perspective of the state of Mississippi where there are no goals or set-asides. We are helping all small businesses seeking public procurement opportunities build capacity initially by putting the proper business infrastructure to their businesses,” Covington said.

“To participate in public works generally require bonding and it is perceived as the major impediment to small businesses getting public contracts. A lack of bonding capacity is a symptom of major root causes, including lack of capital, capacity and organization. Obviously, following the prescription of the model contractor development program will indeed help disadvantaged businesses meet the federal requirements such as 8(a) and other goal oriented opportunities.”

“The Model Contractor Program is one of the most rewarding aspects of my job,” said project manager LaTonia Shirley. “Each time we conclude the program with the graduation ceremony and the attendees tell me how valuable the information has been, it warms my heart.

Shirley said an important aspect of the Model Contractor Development Program is the networking opportunities provided by the program. Business owners get to meet other owners that may be able to help them in some capacity, and they get to meet professionals such as loan officers, bond agents, CPAs and attorneys that otherwise may not have been accessible to them.

“Often times, these business owners just don’t know where to go for help, and the program puts resources right at their fingertips at no cost to them,” Shirley said. “We have a wonderful group of professional volunteers throughout the state that participate with the program.”

Program graduate Ken Flynt, Art & Design Tech, Meridian, said the program made him realize if he was going to have a business, he was going to need to get the proper credentials to be legitimate.

The program includes a set of eight comprehensive workshops, each of which is designed to provide information to the emerging contractor related to improving the company’s operations and thereby making it easier to be bonded or to increase their bonding capacity. These weekly workshops are led by industry professionals in the hosting area and include the following:

» Business planning and management for construction. This module focuses on such areas as assessing or reassessing the legal form of the company, developing a succession/business continuation plan, managing/controlling growth and assembling a business team. Areas covered include legal and corporate structures, certifications/licenses/permitting, establishing goals and objectives under a business plan, and issues related to company management, policies and procedures, and staffing

» Construction accounting and financial management focuses on basic construction accounting concepts and will provide an overview–from job costing to financial reporting–as well as construction-specific practices that introduce the contractors to construction accounting fundamentals. These fundamentals include: debits and credits and how they work, accounting for job cost, work-in-progress (WIP) schedules, percentage-of-completion revenue recognition, and developing financial statements.

» Banking and financing for contractors addresses the need for capital equipment financing, how to determine working capital requirements, the use of lines of credit and establishing a banking relationship.

» Bonding and insurance for new and emerging contractors focuses on what surety bonds are and the various types of surety bonds, how to begin the process of obtaining a bond, the role of the agent/producer and underwriter, the prequalification process, the 3 “C’s,” capital, capacity and character, the costs of bonding, and how to develop a surety bond relationship. Also discussed are the various types of insurances required (commercial general liability, Workers Compensation, etc.) and what to look for in an insurance agent relationship. The module also covers such programs as the SBA Bond Guarantee and Loan Programs, relevant state bond guarantee and loan programs, and any local bonding or financial support programs that might be available for emerging contractors.

» Marketing, estimating and bidding looks at identifying core company capabilities and determining company capacity, developing a marketing plan, identifying targets of opportunity, and making sales calls and visits. For estimating and bidding, the module covers methods of computing measurements, including off-the-shelf estimating software, metric conversions and essential mathematical formulas for estimating and planning construction projects, and preparation of bid documents.

» Project management and field operations looks at project-specific activities, including hands-on advice at the job site. The module covers such topics as plan reading, estimating and bidding, types of contracts (lump sum, cost plus fee, etc.), common contract forms, project planning methods, job costing and scheduling, management of subcontractors, the proper expedition of change orders, and measuring project performance. On the field operations side, the module covers setting up the job site and on-going job site operations.

» Claims and dispute resolution focuses on such areas as mechanic’s liens, the claims process under Miller Act payment bonds, the various mediation services and approaches available to a contractor in a dispute, the arbitration provision in standard form construction contracts and what it means, and when and under what circumstances does one consider litigation.

» Managing growth identifies the most common reasons why contractors, especially small contractors, fail. The class provides suggestions and approaches as to how to avoid these situations and the various management approaches and techniques that help to ensure contractor success.

 

For more information on the Model Contractor Development Program in Mississippi please contact Shirley at (601) 359-3448 or lshirley@mississippi.org or contact Sam Carradine at (202) 778-3638 or scarradine@surety.org.

 

 

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