Whether you contract with the government or you work with small construction contracts, the ability to get your project completed impacts future jobs. With a successful track record, you get more bids and you can earn more money. Many contractors use surety bonds to increase their chances of completing their projects within scope, budget and time. Surety bonds work, but bonds are more effective when you understand which one is most appropriate for your business.
Types of Surety Bonds Available for Your Contracts
Performance and managing costs are integral aspects of managing construction projects. Without managing performance and costs, construction projects could become unwieldy and fail to deliver the end result. In order to ensure you have control over your construction site and that contractors are performing as expected, use the surety bonds below (as necessary):
- Bid Bond
- Payment Bond
- Ancillary Bond
- Performance Bond
Backed with the enforcement of the law, choosing the bond that is most appropriate for your business and your deliverables will help your projects be successful.
Bid Bond
When you want reassurance that contractors bidding on your project will complete the work if they win the project, then you want the reassurance provided by a bid bond. These bonds ensure that your company will only consider contractors who are financially capable of delivering on your bid.
Payment Bond
In large contracts, payment bonds are often required, especially in the construction industry. With a payment bond, you do not have the risk of a contractor failing to pay their employees. A payment bond ensures that everyone is paid so that your project continues with reduced risks originating from the contractor.
Ancillary Bond
Compliance and regulatory requirements outlined in the project requirements must be followed. Without doing so, the entire project could come to a halt. With an ancillary bond, you increase the chances that your construction project remains compliant, preventing your client from incurring fees and penalties after the project closes.
Performance Bond
With a performance bond, you have the reassurance of knowing that the work you specified for the project is the work that will be delivered by the contractor. With the threat of being sued ever-present, projects requiring performance bonds often have higher rates of success.
How to Use Bonds
When you use bonds, it is important to ensure that you are using the bond that will motivate contractors to meet your requirements. You can use a number of different bonds together to increase your chances of success. Start by examining what the end result should be to determine what surety bond will yield the best result for your project.
Get the coverage you need. Call Texas Insurance Agency at (713) 921-8000 for more information on Houston surety bonds.
