Monday, October 7, 2013

Don't bet your buisness! Ten things every contractor should know about surety bonds (#1)

It’s unfortunate, but we regularly work with construction companies that have unintentionally bet their business.  They do this by taking on risk where they didn’t expect.  We work together to develop a plan to manage or mitigate risk on construction projects.  This is done by a risk assessment as well as determining the most fiscally responsible option that ensures timely project completion, which is critical to a successful project – and a sound business.  Instead of betting on a contractor (or subcontractor) who does not have the requisite level of commitment or financial stability creates risk because they could easily become bankrupt part way into the job – or not pay their subcontractors.  Either way, the effects can be devastating to your bottom line. A common solution is surety bonds as they offer a great solution – providing financial security and construction assurance.  The surety bonds provide assurance to the project owners that all contractors will perform the work and pay specified subcontractors, laborers, and material suppliers.

The top ten things to know about surety bonds:

  1. A surety bond is a three-party agreement where the surety company assures the owner (called the obligee) that the contractor (or principal) will perform according to the terms of the contract.  Many times, these are known as contract surety bonds.

Don't bet your buisness! Ten things every contractor should know about surety bonds (#1)
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