A surety takeover project is a signed contract with an unfinished job and a predecessor’s paperwork. The completion team inherits unpaid subcontractors, an owner who has run out of patience and liquidated damages that keep accruing. Lead it with a forensic project manager and a superintendent who can audit work in place, not with whoever is free.

The first week on a surety takeover project is spent counting. How many feet of storm drain are in the ground, how many of them the defaulted contractor billed, and how many the owner already paid for. Someone walks the site with the last pay application in one hand and a tape in the other, and the gap between those three numbers decides what the surety owes. Most completion contractors send whoever is free to do that walk. The choice is made before anyone has read the takeover agreement, and it shapes everything the job costs afterward.

What happens to the job when a contractor defaults?

The owner terminates the contractor’s right to proceed and calls on the performance bond. The surety then chooses: take over and complete the work, tender a completion contractor for the owner to sign, finance the original contractor to finish, or pay and let the owner complete. Each option staffs the job differently.

Federal work spells the sequence out. The default clause lets the government take over the work and complete it “by contract or otherwise”, and holds the contractor and its sureties liable for the increased cost. The default procedure has the contracting officer send the notice to the surety and ask whether it wants to arrange completion. If it does not, the government normally relets the work on the same plans and specifications.

The bonds exist because the Miller Act requires them, and FAR 28.102-1 sets the current trigger at contracts exceeding $150,000. A federal surety must appear on the Treasury’s approved surety list. A small-business bond may also carry an SBA guarantee, offered on contracts up to $9 million non-federal and $14 million federal, which gives a federal agency a share of the loss.

Surety optionWho runs the remaining workWhat the project manager inherits
TakeoverA completion contractor hired by the suretyThe predecessor’s records, reporting to the surety and its consultant
TenderA completion contractor signed directly to the ownerThe contract itself, with the surety funding the shortfall
Finance the principalThe original contractor, with surety moneyA team that already failed once, under a monitor
Pay and step backA new contractor the owner relets toA fresh bid on the defaulted design

The first two rows are where a completion contractor’s bench gets tested, and the test arrives before the job does.

Why is a takeover project harder to staff than a new start?

Nothing on a takeover project starts clean. The records belong to someone else, the subcontractors are owed money by a company that has stopped answering, the owner has stopped extending good faith, and liquidated damages keep accruing while the new team learns the job.

Start with the records. The defaulted contractor’s pay applications, schedule of values, change order log and daily reports describe the job as it was written down, and nobody was left to reconcile that file with the field. Whatever was agreed verbally on site, a substitution or a resequenced pour, carries no proof, and the risk falls on whoever has to establish it months later. On a takeover, that is the completion team. A contractor whose project manager leaves during a claim meets the same gap: the file stays and the witness goes.

A worked illustration with assumed figures shows why the count matters. On a $24 million wastewater expansion near Tampa, the defaulted contractor has billed 60 percent of the contract. With retainage held, the owner has paid 54 percent. The completion team’s inventory verifies 51 percent in place. The owner has paid for 3 points of work that does not exist, or $720,000, and the predecessor billed 9 points ahead of the ground. On buried work the count leans hardest on the records, the same discipline a tunnel project manager brings to ground nobody has seen.

Billed, paid and in place on a defaulted job Bar chart, Billed, paid and in place on a defaulted job: Billed by the defaulted firm 60%, Paid by the owner 54%, Verified in place 51%. Billed, paid and in place on a defaulted job The owner paid for work that is not in the ground, and the completion team's count is what provesit. 0% 25% 50% 75% 100% Billed by the defaulted firm 60% Paid by the owner 54% Verified in place 51% Source: Worked example in this section
The owner paid for work that is not in the ground, and the completion team's count is what proves it.

Then the subcontractors. Under the Miller Act, anyone unpaid 90 days after their last labor or material can sue on the payment bond, a second-tier supplier must give the prime written notice inside that window, and suit must come within one year. State statutes copy the model. North Carolina’s bond statute covers public projects in Charlotte and Raleigh, and the Florida statute requires a recorded payment and performance bond before work recommences after a default. The completion project manager usually needs the same subcontractors back on site while their claims against the bond are still open.

Then the owner, and the clock. Under the federal liquidated damages clause, damages continue to accrue after termination until the work is complete, and the takeover agreement binds the surety to them unless the delay is excusable. At an assumed $4,000 a calendar day, every week the inventory takes costs $28,000.

Who should lead a surety takeover project?

A project manager who reads documents before drawings and can defend a number to a skeptical audience, paired with a superintendent who can audit installed work and restart crews that went unpaid. Both should expect a short tenure: the job ends at substantial completion, and so does the seat.

The staffing is not a private matter between the surety and its contractor. On federal work the contracting officer should accept a surety’s completion offer unless the people or firms proposed “are not competent and qualified”, in the words of FAR 49.404. The names on the takeover proposal are part of what gets approved. A surety claims professional comparing two completion contractors is comparing two project managers, whether the proposal says so or not.

The profile reads like a job ad nobody would post:

  • Someone who reconciles a stranger’s pay application to the ground, and enjoys it. Fewer people do than the industry admits.
  • Someone who writes everything down, because the surety’s consultant, the owner’s counsel and possibly a judge will read the job file.
  • Someone content to be gone in twelve to eighteen months, with no need for a career ladder at the completion contractor.
  • Someone calm with unpaid subcontractors, who knows the bond timelines and never promises a payment the surety has not agreed.
  • Someone who recognizes an owner meeting that is really a deposition, and speaks accordingly.

The superintendent mirrors it. The builder who wants to start from clean dirt will be miserable here. The one who walks a half-finished interchange in Houston and can say within a day which work must come out is worth more than a better builder.

The Bureau of Labor Statistics counts 380,360 construction managers and 812,210 trade supervisors across all industries in May 2025, at medians of $114,990 and $79,920, figures that span every level of each occupation. Construction quits ran at 2.2 percent in August 2026 per JOLTS, so the forensic project manager a surety wants is almost always employed, usually on someone else’s job.

The completion contractor’s bench, before the tender is signed

A completion contractor has days, not weeks, to put names on a tender response. That means pulling a project manager off a running job, which moves the risk rather than removing it, or hiring for the life of the takeover, a fixed-term seat the interim leadership note covers. The search usually cannot be advertised: the tender is unsigned, the owner is watching, and the subcontractors are deciding whether to come back.

Two situations look similar and are not. A job that is late with its contractor still in place calls for schedule recovery, not forensic completion. A default one tier down is a subcontractor default problem, with a different exposure and a different hire, and the firm-level view a surety takes is covered under bench depth. None of this is legal advice: bond forms, takeover agreements and state statutes differ, and each party should take advice from its own construction attorney.

Selah Talent Partners runs confidential executive search for mandates that cannot be publicly posted, for contractors across the United States. Sureties, bond agents and completion contractors can reach us through the employers page. On the worked example above, every week the completion seat sits empty costs the surety $28,000 in liquidated damages alone, before a single unpaid subcontractor has been called back to site.

Sources and further reading