An informative list of items to keep in mind when it comes to your bond program Read More
When You Build ... Bond
Surety bonds have been used to guarantee the performance of contracts since the beginning of time. The Bible, the Magna Carta and The Merchant of Venice all make reference to the use to suretyship to assure that someone will carry through on promise. Since the late 19th century, surety bonds have been written in the United States by private corporations-and today they are an essential part of everyday business transactions. Construction surety bonds (bid, performance and payment) are the catalyst that enables our existing open, competitive bidding system-mandatory for public construction-to function smoothly.
While surety bonds traditionally have been required in conjunction with public contracts, they are just as essential in private construction. When a company undertakes a building project, risk managers are expected to analyze all the perils that can result in a loss. Yet, in many instances, no attempt is made to protect against the failure of the contractor to perform. This can be far more costly than all other hazards combined.
This is designed to acquaint both public and private owners and their lenders, attorneys, architects, and risk managers with the fundamentals and benefits of construction surety bonds.
Using a Question and Answer format, it demonstrates how surety bonds provide the owner with protection against loss, starting a surety’s thorough prequalification review of the contractor. In today’s economic environment, anyone who plans to build, to provide funds for a building project, to provide legal advice for it or to analyze the risk such a project entails, should consider requiring construction performance and payment bonds for protection. It is only prudent.