Almost every construction project executed today requires an assurance of performance. The Construction Bonds ensure that the contractors are bound to deliver performance as assured under the bond. The bond itself secures the owner from lack of performance, contractor default, warranty issues, and more. The bond also secures the contractor from losing any money due to the non-commitment of the owner once the project has begun.
Who All are Parties to the Bond?
- Principal – They are the contractors who request for the Construction Bond before they take up a project. Subcontractors can also secure these bonds for working under the primary contractor for delivering essential equipment and supplies to them.
- Surety Company – They are the ones who issue the bond. They can be a bank or a private group that is financially strong enough to provide appropriate coverage. They pay the obligee if the contractor delays (or defaults) the project.
- Obligee – They are the project owner who gets assurance under the bond that their project will be duly delivered. If there is a delay or default, the surety company will compensate for their loss.
How Contractors Can Benefit from Construction Bonds
- They represent your financial standing: These bonds are issued according to your financial standing and past performances. With every bond, you will be able to build more credibility.
- They help you land more projects: With strong credibility, you will have the opportunity to attract more contracts. You can even pick the best ones among those according to your preference.
- They help keep disputes at bay: If there is a dispute after the project begins, the bonds keep you secured from taking any financial hit.
To know more about these bonds and more, call your nearest surety company today.
Those of us that are associated with the construction or real estate market should be very grateful. It has been projected that Florida will grow more in raw population (number of new bodies calling Florida home) than any other State in the Union in the next 20-25 years. Florida is the third most populated state with approximately 23 million people behind California’s approximately 38 million and Texas with approximately 27 million. In the next 25 years, our population will not likely catch either California or Texas, but the gap will definitely be narrowed.
Right now, Florida has an average of more than 800 people moving to the state on a daily basis. The pace is expected to accelerate in the next two decades. Demographic projections have suggested that somewhere between 15-30% of all “Baby Boomers” will end up retiring in Florida. There are 74.6 million “Baby Boomers”, so if 30% move to Florida, that alone will almost double our population. For the next two to three decades, Florida will be the best construction market in the country, possibly the world.
The Infographic, “Types of Construction Bonds,” explains the different types of bonds used in construction projects across the US. In addition to identifying the different types, the infographic explains their purpose and why they are useful in the construction industry.
Construction Bond is a commonly used name for a type of surety bond that protects the obligee (the project owner) by ensuring the principal (the contractor) fulfills the terms of the contract. If the principal does not fulfill their obligations, the surety company will compensate the obligee according to the terms of the surety bond.
This Infographic categorizes the different types of construction Bonds into 3 types. The first type is bid bonds, which protects the obligee if the principal fails to honor their bid. The second type is performance bonds, which protect the obligee related to the terms of the project. The third type is payment bonds, which guarantee all payments to sub-contractors involved in a project. To learn more about construction bonds, refer to the infographic below.
The Infographic“How can I file a claim for a Construction Bond?” explains how to file a claim for a construction bond in the U.S. It also mentions the steps involved in sending a construction bond notice as well as the factors on which the claim is investigated before approval. Continue reading Infographic: The Process of Construction Bond Claims →
Construction bonds are a general classification of surety bond used in the construction industry. It guarantees that the principal (the contractor) will complete a project according to the terms of their contract. If they do not for any reason, the surety company will have to pay the obligee (the project owner) for their losses. There are three primary types of construction bonds: Continue reading Which Construction Bond is Best for You →