Unpredictable Job Meets Flexible Bond

Construction jobs tend to be costly and often unpredictable. This is why a surety bond is typically required for construction projects, especially when they are substantial undertakings. It has been quite an unpredictable endeavor when it comes to the project being worked on at Lake Mead in Nevada State.

A company named Vegas Tunnel
Constructors is implementing a new intake which will draw water from deep in Lake Mead, enough to let the flow resume even if the reservoir drops lower than the two existing pipes that provide about 90 percent of the Las Vegas Valley’s drinking water. The projected $487 MM job involves mining a 23-foot tunnel that will channel through three miles of rock and emerge from the bottom of the lake. Unfortunately, the contractor has encountered some unexpected obstacles.

The problems in the tunnel are worse than calculated by the geologic report having experiencing flooding and debris. A $39.5 million “change order” is needed for the intake project because of the roadblocks and the necessary blueprint modifications that are needed to get the job up and running again.

“If the board rejects the change order, the authority will be left with two options, stop the work or keep going and “assume liability” ”, said Water authority General Manager Pat Mulroy.

While this change order option may be a difficult decision for the Nevada Water Authority board to make, it was an obvious choice to obtain a surety bond for this job. If the board approves the change order, the performance bond that is in place will automatically adjust and cover the increased dollar amount avoiding the need for a new bond. The ability to adjust is an advantage of contract bonds and they are flexible in that aspect. Mulroy said this job is so huge and intricate that it took the authority more than a year to find someone willing to insure the work; this would have made it very difficult to find a new bond if the bond contract was not able to adjust for the change order since it took over a year to attain the original bond. Although there hasn’t been a claim put on the bond, the problems experienced with this job show how unpredictable these large tasks can be and why it’s a good idea to have a bond in place just in case things don’t go smoothly.

Surety bonds can be very helpful and flexible. In this case, although the work changed due to unpredicted complications, the bond has the capability to adjust and stay in place for the benefit of both the obligee and public. Hopefully the intake project succeeds at Lake Mead.