As a contractor, you understand how difficult it can be to win a bid for a project development. Setting your bid low is always helpful, but you should also consider filing a bid bond. In fact, some project developers will actually make having bonds for contractors a requirement before letting them place a bid. Below, you will learn all about our bid bonds also known as tender bonds and why you will want to incorporate them into your upcoming project.
What is a bid bond?
Before you begin exploring the overall benefits of bid bonds, you should take the time to learn the basics. In simplest words, a bid bond shows your project owner (hiring party) that your company is capable of doing the job.
These surety bonds are basically a way to obtain financial security for contract bidding proposals. They’re frequently used for larger construction projects, especially commercial developments. By failing to file a bid bond or contractors bond on tender day, the contractor’s bid will immediately be rejected and their time will be wasted. Therefore, all contractors need to become familiar with surety bonds and use them each time they place a bid, win a job, or simply just need to get a Surety’s Consent or Agree to Bond to show the project owner that you will be able to provide bonds in the future if need be.
Information You’ll Need
Before you file your bid bond and issue your bid, you should understand that if the project owner (who you are bidding for) selects your bid as the lowest and awards you to job, you will have to provide a performance bond (This bond is required after you win/get award the job. The purpose of performance bond is that it guarantees the party hiring you that will finish or perform the job fully).
Few questions you need to answer in preparation for your first or next bid:
- What is the quantity of your bid?
- What is the date of your bid?
- Do you have a history of being bonded?
- What is the history of your company?
- Your current, personal credit score
The answers to these questions help determine the rate you qualify at to be a bonded company. In many cases, you will also need to submit your financial credentials, when applying for your bid bond!
Frequently asked questions regarding bid bonds
- How much do these bonds cost? – Free. You pay for bonds after you win the job. Usually 1% of the project value.
- How do I qualify my company to be able to bid on jobs ? – Surety will want to see financials, past job experience, bid details, & other factors.
- What is the purpose of a bid bond? – Instead of putting up your own cash or assets collateral, you post a bond instead.
- What is the turn around times for getting a bond for my upcoming bid? – As fast as 24 hours if underwriting goes smooth and all documents required are present.
- How do I apply for this bonds? – You can contact us.
Benefits as a Bidder with tender bonds
The construction and development world is a “dog-eat-dog” environment, because many development companies will diligently attempt to win a project bid under all circumstances. This is why bid bonds are so important for a winning bidder. This agreement or contract will protect the developer from having the project pulled out from under them, after they have won the bid.
Benefits as an Owner – Why your contractors should have bid bonds.
As an owner of a bid, you will definitely only want reliable developers or construction companies that can afford to finance the project. It would be a complete waste of the owner’s time to select a bidder that cannot fulfill the contract accordingly. The bond company or surety will guarantee that the bidding developer will be able to complete the project per the agreement.
Need To Withdraw Your Bid?
Some contractors will encounter a situation, which requires them to withdraw their bid. You can only withdraw your bid, without losing your bid security, if you do so before the developer opens your bid. There are some cases, when the developer will give you the option of retracting your bid, without repercussions. If you must retract your bid, it is highly recommended that you do so quickly!
File Your Bond for the upcoming bid now!
As a construction contractor, it is essential to recognize the importance and impact of a tender bond. Before you place your bid, you should proceed through our application process, so you can obtain your bid bond, increase your chances of winning the bid and protect your investment!
Other Types of Construction/Contract Bonds we provide:
- Maintenance Bonds – Provides protection for a lengthier period of time.
- Performance Bonds – Guarantee of work being completed.
- Payment Bonds – Provides protection for payment workers.
- Subdivision Bonds – A bond used for subdivison development.
- Site Improvement Bonds – Making improvements to an existing project.
- Labour And Material Bonds – Helps cover Labour and Materials Cost.
- Surety’s Consent or Agreement to Bond – Agreement with the Bond Issuer.
- Bad Credit – Bonding for Businesses with poor credit.
- Fiduciary Bonds – Similar to Insurance (Protects your business)