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Risk Management

Inner-City Underwriting has one mission, helping our clients succeed by helping our clients manage risk. Because we have both risk management and diversity compliance experience , Inner-City fills a huge void.
For large construction projects, there is generally a conflict between risk management and diversity compliance. This conflict increases the complexity and cost of construction.
Here is a short list of challenges we have identified from more than 25 years of working with contractors and project owners of all sizes. 

Capacity
The diversity percentage required for construction projects is getting larger while it does not appear the pool of certified contractors is rising as fast. Small/MBE/WBE/DBE contractors are asked to take on projects significantly larger than they have ever done before to meet the higher diversity goals.
Finance

To qualify as a Small/MBE/WBE/DBE company, a contractor is limited in how large it can grow. This results in a corresponding limit on working capital and credit. It is difficult for small contractors to manage payroll and cost of material while awaiting payouts. The federal guidelines for commercially useful function prohibit the general contractor from carrying payroll or expenses of a Small/MBE/WBE/DBE subcontractor.

Compliance

Significant Small/MBE/WBE/DBE participation will occur at the lower tiers of a projects. This makes it difficult to manage compliance. There is significant concern about second, third and fourth tier subs strictly adhering to rules for diversity compliance which become even more complicated when you add in workforce goals.

Administrative Burden
Small contractors rarely have the back-office staff capable of managing all of the paperwork and data reporting in a large construction project. When the project is insured using an OCIP/CCIP, data reporting become more burdensome. The contractor has to learn two completely different systems for tracking essentially the same data.
Insurance

Many MBE/WBE/DBE companies do not have adequate insurance coverage to comply with the requirements of a large construction project even if it is insured using an OCIP/CCIP. In fact, the off-site insurance requirements of most OCIP/CCIPs can cause more problems than projects that require contractors to provide their own insurance.

Surety

Many Small/MBE/WBE/DBE contractors do not have a bond line or find it difficult to get a bond when the contract is several times larger than any previous project.

The challenges we identified only scratch the surface of issues General Contractors and Project Owners encounter on large construction projects.
We welcome the opportunity to explore to discuss your projects and how our services can help you achieve both risk management and diversity goals.