What You Need to Know about Construction Surety Bonds
Whenever there is a big construction project taking place, one that is likely to take a long time to be completed, there are so many factors that can affect the project regarding quality or time of completion. What happens when you as the investor paid a contractor to have the project delivered within a certain period then they fail? The worst is if you paid to have a particular quality then have the contractor making something that falls short of your expectation. At times it may not be a fault of the contractor because some factors like natural phenomena and fraudulent suppliers can set them back. How then do you protect yourself from such occurrences as the investor?
Construction surety bonds were made for the reason of protecting you such occurrences. A construction surety bond is a contract that is entered by three parties which is the surety, obligee and the contractor. It helps protect you if you encounter some of these challenges. The surety is the insurance company that witnesses, backs up the bond then calculates the premiums to be paid based on the risks involved.
There are some projects that cannot be done without a surety bond considering the size. This is a good thing because it protects the investors of those big projects because a lot of money has been pumped into those projects. With no kind of protection, all that money could go down the drain.
There are different parts of the surety bond such as from Poms & Associates
. They include the bidding bond, which ensures that the companies bidding on the project have provided accurate details about themselves as they bid. A performance bond is another type of bond which is there to ensure that the contractor performs as per your agreement. Sometimes there are issues with payment where a contractor fails to pay the subcontractors on time or as agreed on. In such situations, the payment bond will protect the subcontractors and laborers from the distress of withheld payment.
The construction also provides you warranty because it has a maintenance bond, which requires that the contractor do maintenance and repairs for a given period. This is good because you do not want to incur costs in repairs on a fresh project for something that was caused by the construction team. Lastly, there is the supplier bond that requires the supplier to deliver the right quality of material within the agreed time.
These are some facts about construction surety bond from Poms & Associates
that you should know about.
Other related details may be found at https://www.youtube.com/watch?v=97_9tNOkkYc