Certification In Action

David Pesce, CCIFP, Head of Surety at Munich Re Specialty Insurance, is a 35-year veteran surety underwriter who has advice for bond producers and underwriters who want to advance their career in contract surety: obtain the Certified Construction Industry Financial Professional (CCIFP®) designation.

“Certification in Action” provides insight into the value of the Certified Construction Industry Financial Professional (CCIFP®) designation for CCIFPs, their companies, and the industry.

The CCIFP designation focuses specifically on the management of finances in the construction industry. It is the only certification of its kind that demonstrates competency in construction finance.

For surety bond producers and underwriters, the CCIFP can stand on its own or add more credibility to those who hold the Associate in Fidelity and Surety Bonding (AFSB) surety designation. It’s a way to demonstrate a specialization to others in the profession. Certificate holders also participate in continuing education to keep up to date on the industry’s emerging trends.

“This certification is, to my knowledge, the only one specific to contract surety for someone who is in contract [surety] for a career,” according to Pesce.

As a CCIFP since 2012, Pesce is now the Vice Chair of CFMA’s Certification Division.

Pesce is quick to point out the practical advantages of Certification. One of the basics of the job of surety bond producers and underwriters is to assess the financial stability of contractors bonded under the surety umbrella. Studying the fundamentals to pass the 4.5-hour exam and then maintaining Certification on an annual and triannual basis lays the foundation for that skill.

“The more you know and understand about those financial reports, the less you will have to question and the quicker you can make your decisions,” Pesce said. “It gives you the ability to communicate and understand the language of construction financial management whether you’re dealing with contractors, banks, or CFOs.”

Maintaining Certification means staying up to speed on the latest developments in construction industry practices, including financial reporting changes. Pesce notes the changes to revenue recognition standards as a current example. This had been the subject of numerous continuing education sessions for many years, allowing CCIFPs to fully understand its impact well before its effective date.

“The Financial Accounting Standards Board has changed that to be a performance-based calculation of the revenue recognition,” he said. It can be a significant change to any construction company, depending on what the company does and how its contracts are structured; the new standard can also create internal accounting changes and many changes to financial statements.

CCIFP surety bond producers can explain the changes to their underwriters because their continuing education keeps them abreast of accounting developments. “As a surety adviser, it separates you from the other agent who doesn’t understand it,” Pesce said. He recounts a concrete example of how his CCIFP training saved him a bundle. “I had a circumstance on an account where financial statements were provided to support a bond request, and they did not make any sense to me. Something seemed wrong about those financial statements,” he said.

His CCIFP background led him to seek more data. “The additional information showed there were significant problems with the contractor having financial difficulties. So I declined,” Pesce said. “Another surety wrote that bond and another bond after it. Ultimately, that contractor went into claim. It ultimately went bankrupt.” In all, several million dollars was paid out in claims because others relied on inaccurate financial information.

When Pesce took the exam, he prepared with an all-day prep course and studied 1-3 hours per week during the month before the exam. Currently, exam-takers have access to online study guides and study groups as well as in-person study groups associated with local CFMA chapters.

In addition to finances, exam-takers must master industry-related knowledge on income recognition, accounting and reporting, taxes, risk management, human resources protocols, and IT. The proctored exam sessions are available at a Pearson VUE testing sites year-round or online through remote proctoring. According to cfma.org/ccifp, at least three years of construction industry experience is needed before taking the exam.

At the end of the certification process, CCIFPs have a leg-up on peers and colleagues in the surety industry. “The advantage is that it sets you apart from someone who doesn’t have the body of knowledge. Once you obtain your Certification and go through the continuing education credits, you stay far more on top of emerging issues,” Pesce said. “Now you’re an advisor that has a body of knowledge above other advisors specific to what we do in the surety industry.”

A version of this article was first published with NASBP.

For more information about the CCIFP designation and eligibility requirements and how to apply for the exam, go to cfma.org/ccifp or send an email to certification@cfma.org.

If you have earned your CCIFP designation and would like to share your experience, please reach out to Veronica Whitehead at vwhitehead@cfma.org.

Copyright © 2022 by the Construction Financial Management Association (CFMA). All rights reserved. This article first appeared in July/August 2022 CFMA Building Profits magazine.