Do you have the Denton Performance Bonds you need?
Surety bonds used for construction projects are called contractor bonds, contract bonds, or construction bonds. A project manager often requires contractors to secure a contractor bond as a guarantee to perform under the contract. If the contractor doesn’t perform well, the project owner can look to the surety bond company to ensure the contracted work is completed. Contractor bonds include, among others, bid bonds, performance bonds, and payment bonds.
A bid bond provides a project owner with protection that a project bid proposal will be accurate, a performance bond will be posted, and the contractor will be ready to begin work if awarded the project.
A performance bond ensures that a project is completed according to the provisions of the contract (e.g., agreed upon price, within stated time period). Contractors must obtain a performance bond for all federal and state government construction contracts.
A payment bond is required so that subcontractors or suppliers are compensated for work completed under the contract.
Contractor Bond Process
The contractor bond process entails the following steps:
1. The project manager determines whether the project specifications require you to be bonded.
2. If so, you must contact your surety bond company to obtain a bid bond.
3. Once a bid bond is obtained, you will submit your precise project bid proposal.
4. If your bid is selected, you must contact your surety bond company to obtain a performance bond. Many surety bond companies will package performance and payment bonds together; if so, request a payment bond as well.
5. Once you have completed the project under the terms of the contract, you should contact your surety bond company as the bond will likely no longer be necessary.
Denton Performance Bond Price Calculation
The price for contractor bonds varies according to the amount of the contract, the experience of the contractor, the credit history of the contractor, and the financial strength of the business. The premium rate paid is a percentage of the contract or bond amount. The premium rate is in the range of 1 to 10 percent. Larger contracts have lower premium percentages than smaller contracts but result in a more comprehensive review of a contractor’s financial strength.
Bid bonds can usually be obtained without a fee, while some surety bond companies will charge a small administrative fee around $100 for each contract. A bid bond will usually amount to roughly 5 to 10 percent of the total contract amount.
The premium amount for Denton performance bonds is generally between 1 to 10 percent. Contractors with a solid credit history and extensive work experience pay between 1 to 3 percent, while contractors with poor credit history and less work experience pay between 4 to 10 percent.