January 14, 2000 1

The NAMC LCDP WillProvide A Proven Contractor Capacity Building Program

For The Public and Private Sector

January 14, 2000 2

The LCDPThe Local Contractor Development

Program is the leading national program for achieving small contractor

participation in public and private sector construction projects.

The LCDP provides a new basis for underwriting, that substantially reduces

the traditional barriers that prevent participation: surety bonding and

contract financing.

January 14, 2000 3

The LCDP Goals

• Achieve productive small business participation in construction projects

• Achieve measurable results• Savings on awarded work

• As measured by the difference in the awarded prime bids of participating LCDP contractors from the next lowest non LCDP participant

• A larger pool of small business prime bidders• In general without the LCDP there will not be additional new

small business prime bidders

• Provide a foundation for the ongoing success of small contractors

• Enhance local economic development

January 14, 2000 4

The LCDP Elements

• Outreach

• Qualification Assessment

• Surety Bonding and Contract Financing

• Technical Assistance Referral

• Contractor Progress Monitoring

January 14, 2000 5

The LCDP Team

• The Owner funds the LCDP through the NAMC Chapter– NAMC’s PMs and Financing professionals will conduct a LCDP

Qualification Assessment.– NAMC’s PMs will perform Construction Progress Monitoring– NAMC’s outreach staff will conduct Outreach and Referral

Qualification Data Collection & InterviewsConstruction Progress Monitoring

Underwriting for Surety BondingContract Financing

OutreachReferrals for Assistance

Owner’s Project

January 14, 2000 6

The LCDP Methodology • Early analysis determines the contractor

community’s capacity• Technical assessment provides qualified

contractors with surety bonding and contract financing

• Ongoing contractor performance monitoring reduces risks

• Feedback on the path to qualification, for firms lacking capacity

January 14, 2000 7

Outreach

• Communications and marketing plan to encourage participation by small contractors

• Identification of available support services provided by locally based organizations

• Expansion of existing pool of local contractors eligible to bid on projects

January 14, 2000 8

The LCDP Underwriting “Qualification Assessment”

• As rigorous as traditional underwriting, but with a different focus– Contractor’s technical qualifications, experience

and track record are the major criterion– A qualifying “financial floor” designed with small

business realities taken into account

• Business improvement recommendations provided regardless of approval level

January 14, 2000 9

In-house Bonding Authority

• Qualification Assessment assures technically qualified contractors

• Conducted by engineering/construction and financial professionals

• Extensive interview, references, credit check and contractor progress monitoring

• Rates that will keep bidders competitive

January 14, 2000 10

In-house Contract Financing Authority

• LCDP underwriting is used for contract financing and surety bonding

• “Feeder System” Local banks benefit from financial development of emerging businesses

• Financing terms matched to local market

January 14, 2000 11

The LCDP Will Provide Referrals to Technical Assistance Resources

• Administration• Outsourcing• Management• Job Cost Reports• Software• Financial Statements• Labor Burden Costs

• Subcontractor Monitoring

• Equipment Utilization• Contracts Completed• Profitability• Job Cost Reporting

January 14, 2000 12

Performance Monitoring

• Monitoring of schedules, performance, and compliance with CM directives

• Preparation of periodic and final reports on contractor progress and performance

• Coordination of contractor performance information with construction management team

January 14, 2000 13

The LCDP Results

• Achieve small business participation goals in a non set-aside, non preference environment

• Enable small contractors to overcome credit and bonding hurdles

• Contribute lasting economic benefit to local communities through creation of viable local businesses

• Provide a unique database of qualified local contractors

January 14, 2000 14

The LCDP Uniqueness• Program targeted to support local emerging

small and disadvantaged firms• Program operation in a non set-aside, non

preference environment• In-house authority for surety bonding and

contract financing – Pre-qualification assessment to assure contractor

capabilities – Underwriting for surety bonds and contract

financing technically based – All technically qualified participants receive surety

bonding and working capital• Contractor Progress Monitoring on awarded

work

January 14, 2000 15

Support for the NAMC LCDP

• DevCorp Consulting Services– LCDP training and program consultation– QA final package review, surety

recommendation– Contract Financing

• Aon Construction Services Group(The market leader in contactor insurance products)

– QA recommendation approval– Surety bonding

January 14, 2000 16

The LCDP, a Proven Program

• Experience with programs in Florida, Texas, Michigan, Maryland, Colorado, Ohio and Washington

• Over 500 contracts successfully completed with no losses or defaults

• Over $300M in bonding capacity and $40M in contract financing provided

• Over 100 new prime contractors created

January 14, 2000 17

For Information Contact:Carlton LewisPrincipal(202) 297-6350

Janette “Jan” Keiser Principal(206) 714-8955

www.devcorp.net