Secure Your Project with Construction Bonds

May 29th, 2018 | by admin

Construction projects usually involve different parties, but the main participants in are the contractor and the investor. They enter into a legally binding agreement on the beginning and completion of the project. Since there is a contract, chances of defaulting on terms are slim but don’t be so sure. The contractor can fail to satisfy the exact stipulations as laid down by contract. When this occurs, you should have a remedy.

Construction bonds are one among these strategies to cushion yourself against such occurrences. These are contracts that contractors sign to ensure protection against adverse effects that might limit their ability to complete the project. Protects against matter like construction disruptions, failure to fully comply with the exact specifications of the project and liquidation of the construction firm. Anything can happen during a construction project’s development, and bonds are there to ascertain that you don’t suffer from the effects. The bond also ascertains that the contractor is going to compensate their works as well as suppliers in time.

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The Need for a Construction Bond

If you are a contractor, it would be difficult for you to qualify for a contract if you don’t possess a bond. The contract supplier requires an affirmation that you are going to adhere to ethical business practices. It is the last choice legal resort of when a contractor fails to meet the agreed-upon standards diligently to limit the injuries that the contract supplier is prone to suffer. It is a way for the project owner to have confidence in your commitment to complete the project according to schedule. For the investor, in case the contractor fails to fulfill the terms and conditions stipulated in the contract, they can claim loses via the construction bond.

Types of Contractor Bonds

A person or firm responsible for a project may require a different contract bond MA for every task before they acquire your services for the initiative. Since there are various stages in the project’s lifespan, different demands are sure to come up. The different bonds are:

  • Bid bonds: The principal party will require a guarantee of the accuracy of the financial status of the construction firm before giving them the contract. This is to ascertain their seriousness to follow up with the project up to completion if they acquire the tender.

  • Payment bond: These are submitted to determine that the contractor is going to pay the sub-contractors and suppliers in time.

  • Performance bond: Guarantees that the contractor is going to complete the project according to the stipulated guidelines and agreement with the investor.
  • Maintenance bond: Ascertains that the contractor utilizes quality materials during the construction period. If at any time structures need repairs during the surety period, the contractor is liable to compensate the investor.

The cost varies according to the intensity of the project. A massive project involving high volume material purchases, intricate building designs, and very many laborers would have a higher bond cost. You can utilize firms that offer bond application services to FastTrack your bond application and processing for a smoother and smoother bonding process.

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