February 22, 2016
The Dotted Line: How to navigate ‘the 3 Cs’ of construction bonding
Source: Construction Dive, Kim Slowey, February 9, 2016
“Payment and performance bonds required.” Those words can signal a giant dead end for some contractors who would like to bid on public work or large private projects but haven’t yet waded into the bonding world. However, the bonding process doesn’t have to be mysterious or sweat-inducing as long as companies are equipped with the right information.
The most common types of construction bonds are performance and payment bonds, which are kinds of surety bonds. A payment bond guarantees the owner that the contractor will pay all the supplier and subcontractor bills associated with the project, and the performance bond is the owner’s assurance the project will be completed in a timely manner and with high quality.
Those who have bumped into bonding requirements on past jobs might have seen a “bid bond” requirement. This is a bond that guarantees the owner that the contractor will be able to meet the requirements of the contract for the amount of the submitted bid. But if a company has bonding capability for performance and payment bonds, these aren’t usually a problem to secure.
Surety, but not insurance
But before delving into what surety bonds are, let’s first address what they are not. Even though surety bonds are obtained from an insurance company, they are not insurance. Read More …
Several types of bonds are available. Contact your nearest PTAC to learn more about them and how they might help your business.
For help with Government Contracting: contact your nearest Procurement Technical Assistance Center (PTAC). Funded through Cooperative Agreements between the U.S. Department of Defense and state and local governments/institutions, PTACs provide free and low-cost assistance in virtually all areas of government contracting.