I spent my 20s mismanaging my money, and came to regret all of those impulse purchases placed on credit cards when my credit score plummeted due to missing a few payments. I didn't learn how much this would affect my life until I was denied for both an auto loan and mortgage in the same year due to my bad credit score. I spent the next few years cleaning up my credit report and putting every extra penny I had toward old debts. Having to put my impulse spending on halt was difficult at first, but it was a great learning experience and I now realize how rewarding saving and investing money really can be. I have put a lot of research into good money management techniques, so I decided to start a blog to share what I have learned with anyone who needs help!
If you are new to the construction field and will soon be bidding on projects, it's important for you to be aware of the use and functionality of bid bonds. Because the majority of construction projects require them in order for a bid to be accepted or even considered, it's virtually impossible to successfully work in the construction field without being able to provide bid bonds. Therefore, the information below will permit you to have a better understanding of bid bonds and how they work, for each future project that you might bid on.
Understanding How Bid Bonds Work
Bid bonds play a vital role in the process of appropriate companies or professionals who are applying or bidding on construction properties. They serve as a guarantee that if the bid is accepted, the selected person or business or has the financial ability to complete the work. It's accessed and provided by each applicant for a construction job as part of the bidding process and federal law requires their use on federal building projects.
The presence of a bid bond verifies that if your bid is ultimately selected or if you're awarded the contract because another company withdraws from the project, the project can still be finished at the lowest price. That security is essential, given that otherwise it is possible that some less than reputable companies might use that opportunity to increase their asking price, thus raising the completion cost substantially. As part of the bond, the surety company providing that verification commits to paying the difference between your bid and the next lowest bid if the company that is first selected for the project declines the work.
Getting A Bid Bond For The First Time
The bid bond is a debt that you secure from a bonding company, which is often a better choice since it does not use the often-limited cash funds. It's important to note that your bond can be up to 20% of the bid you have submitted. In exchange for having the bond underwritten for you by the surety company, you will be expected to pay them a fee of up to 5% of the amount. In some situations, additional fees might be added to that 5%.
The bond in question must typically be submitted with the bid. In many instances, you will find that your bid cannot be considered or even accepted without the accompanying bid bond. You can expect the surety company to verify pertinent information about your bid, such as your experience in the field, creditworthiness, competitive pricing for similar bids, etc.
In conclusion, bid bonds exist as documentation that each person or professional entity who submit a bid for a construction project has the financial wherewithal to complete the task without unnecessary or unplanned delays. Therefore, if you're new to the construction field, it's best for you to be familiar with the facts shared above to maximize your future success.Share
29 June 2017