Obtaining The Bid Bonds You Need Right Now
As a contractor in Canada, there has never been a better time to begin raking in revenue. Of course, it is truly difficult for a construction contractor to begin working, until they’ve familiarized themselves with their bonding requirements. One of the most vital is undeniably the bid bond for contractors. This surety bond is an absolute necessity and is often a requirement for placing your bid. As a contractor, you will want to scour the information below and learn about the benefits of choosing SuretyKings for your tender bonds for construction.
The Parties Involved
Before going any further, it is absolutely essential to familiarize yourself with the three parties involved in a surety. These will be listed below for your consideration.
Principal – As a contractor, you are the principal. You are responsible for fulfilling the obligation, which has been agreed to ahead of time.
Obligee – The owner or your client will be the obligee. If you fail to live up to your end of the bargain, the bond will be payable to the obligee.
Surety – The surety is the entity, which will take over the obligation, if the principal fails to do so.
The same concept remains in place for the bid bond and the three parties remain the same.
The Bid Bond
When attempting to obtain the rights to a construction project, the contractor will be required to place their bid. In many cases, the contractor will not be able to place their bid, until they’ve obtained an accompanying bid bond. The contractor issues this bond to the current project owner. The bond is immensely helpful for the project owner, since it helps to ensure that the contractor will follow through with the contract, as agreed upon when the bid was placed. A cash deposit is made at this time and it can be forfeited, if the contractor fails to execute the contract.
After The Bid Is Accepted
After your bid has been accepted, you will need to work quickly to begin living up to your end of the agreement. Not only will you need to begin working on the project, but also you will need to obtain the appropriate performance and payment bonds. If the contractor fails to obtain these bonds, the initial deposit may very well be forfeited to the owner. With this in mind, you will want to remain in contact with SuretyKings. We will be able to help ensure that you are able to obtain each and every one of the bonds needed to fully carry out the job to a satisfactory conclusion.
Reasons For Defaults
There are a handful of things that can go awry and many of these complications can results in the bond defaulting. For starters, the obligee may delay the execution of the contract, which could make it complicated for the contractor to finish the project in a timely manner. The bidder may also decide to revoke their initial bid, due to a pricing error. If the bidder undergoes financial turmoil and is forced to become insolvent, the bond will likely default. Before these problems arise, you will want to make contact with SuretyKings and see how we can help!
When a construction job is up for bid, any contractor can get involved in the bidding process. The project owner will be responsible for getting the project off to a good start and all the way through completion. With this being said, there are many contractors that lack financial stability to abide by the terms of the contract. This is where the bid bond for tender will come into play, since it will protect the project owner from monetary losses.
It is never wise to just take the contractor’s word for it, since you can never predict the future of the project. A tender bond will definitely make the project owner sleep better at night, since they will have something to fall back on, if the contractor fails to satisfy the contract.
Filing a Claim
If for some reason, the contractor calls a halt to the project for some reason or another, the project owner will need to file a claim with the surety company. Once the claim is submitted to the surety, an investigation will be implemented. If the results are found in favor of the project owner, then monetary reimbursement will be made.
In turn, the surety company may decide to file a lawsuit against the contractor, since they are liable on the bond. The contractor will also be subjected to penal fees, which may total up to 10-20 percent of the total bid amount. Read more about filing a surety bond claim.
Get Your Bid Bond Now!
SuretyKings, a Canadian bonding company offers an unlimited array of bonds to all contractors. Investing any monetary amount into a building project is very risky and the only way to fully protect you is with a bid bond. Contractors that are serious about their job should also get bonded, since this is a great way to ensure clients that they are responsible and reliable.