A surety bond is the only way you are going to ensure that the project is completed should the contractor default. It is a contract between the principal (contractor) and the surety company to shield the obligee (project owner) from the losses that may occur as a result of the contractor's inability to deliver on project. The company is therefore obligated to find another contractor for the purpose of completing the project. As a contractor, you have many opportunities to buy surety bond for contractors in California.
The first step is to be conversant with the types of bonds on offer and their benefits. There are four major classes of bonds. The bid bonds guarantee that the contract bidders will enter the contract, pay as required, and carry out other obligations as required. The suppliers and the subcontracts are covered with the payment bond.
The third one is the performance contract that is there to safeguard project owner. It guarantees that their project will be completed on time and according to the terms of the contract. Lastly, the ancillary contract is there to ensure that all requirements that are integral to the contract but are not related to performance are also performed.
As a contractor, there are many instances when you need the surety bond. As a condition for contract award, any Federal construction that is valued at $150,000 or more will require that contractors buy this insurance. The situation is not very different with the state governments, the municipal governments, and other local authorities. Most large private projects also require similar insurance. Of late, most services contracts and supplier contracts are also asking for similar assurance.
The situation is understandable given that no project developer is ready to gamble with their hard earned money. The public projects have to be completed on time, and this is a requirement by law. It is for this reason that the contractors with surety bonds tends to win more contracts and enjoy business expansion.
The investors (developers) have a lot to enjoy by giving the contracts to the companies that have the surety bonds. First, they are sure that they are dealing with the right company that is fully qualified and has the capacity to carry the project to completion. Normally, the bond companies usually assess the qualification, experience and the capacity of the constructors. Secondly, the investor is at ease because even if the contractor defaults, the cover ensures that another constructor is brought in to complete the project.
The contractors also stand to enjoy many benefits. First, they automatically increase their business opportunity as a result of this cover. In addition to this, they are likely to benefit from financial, technical, and managerial advice from the bond company. Lastly, the subcontractors do not need the mechanic's liens.
The bonds are not usually costly. In California, the cost varies from 0.5% to 2% of the cost of the project. The cost depends on a number variables including size, the location, duration and even the experience level of the contractor. There are several companies that are ready to sell this bond to contractors in California. However, it is important to get value for your money by buying from the company with the best deal.
The first step is to be conversant with the types of bonds on offer and their benefits. There are four major classes of bonds. The bid bonds guarantee that the contract bidders will enter the contract, pay as required, and carry out other obligations as required. The suppliers and the subcontracts are covered with the payment bond.
The third one is the performance contract that is there to safeguard project owner. It guarantees that their project will be completed on time and according to the terms of the contract. Lastly, the ancillary contract is there to ensure that all requirements that are integral to the contract but are not related to performance are also performed.
As a contractor, there are many instances when you need the surety bond. As a condition for contract award, any Federal construction that is valued at $150,000 or more will require that contractors buy this insurance. The situation is not very different with the state governments, the municipal governments, and other local authorities. Most large private projects also require similar insurance. Of late, most services contracts and supplier contracts are also asking for similar assurance.
The situation is understandable given that no project developer is ready to gamble with their hard earned money. The public projects have to be completed on time, and this is a requirement by law. It is for this reason that the contractors with surety bonds tends to win more contracts and enjoy business expansion.
The investors (developers) have a lot to enjoy by giving the contracts to the companies that have the surety bonds. First, they are sure that they are dealing with the right company that is fully qualified and has the capacity to carry the project to completion. Normally, the bond companies usually assess the qualification, experience and the capacity of the constructors. Secondly, the investor is at ease because even if the contractor defaults, the cover ensures that another constructor is brought in to complete the project.
The contractors also stand to enjoy many benefits. First, they automatically increase their business opportunity as a result of this cover. In addition to this, they are likely to benefit from financial, technical, and managerial advice from the bond company. Lastly, the subcontractors do not need the mechanic's liens.
The bonds are not usually costly. In California, the cost varies from 0.5% to 2% of the cost of the project. The cost depends on a number variables including size, the location, duration and even the experience level of the contractor. There are several companies that are ready to sell this bond to contractors in California. However, it is important to get value for your money by buying from the company with the best deal.
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