What your company needs in order to Qualify for Bid bonds
Do you have the desire to work as a construction contractor within the country of Canada? If you truly wish to achieve your goals and begin earning a good living, you’ll need to familiarize yourself with the business and the requirements you’ll need to meet. Not only will you need to work diligently and relentlessly to keep your clients satisfied, but you’ll also need to abide by the laws set forth by the Canadian government. Both are easier said than done, but you’ll need to pull it off or you’ll never succeed. Qualifying and acquiring bid bonds will become a top priority and a true necessity, if you wish to acquire the highest paying jobs. How does the process work? Continue reading to find out.
Understanding Bid Bonds
Before rushing forward, you should take the time to learn about the importance and purpose of the bid bond. Once you’ve analyzed the paramount importance of this specific surety bond, you’ll fully understand why the qualifying process can be strict. First and foremost, the bid bond is required to prevent untrustworthy companies from entering into a construction project, despite not having the skills needed to finish the job. Secondly, the bond helps to guarantee that the bidding company will be able to secure the succeeding bonds, such as the performance bond.
Since the company was capable of obtaining enough capital to acquire the bid bond, they’ll most likely be able to acquire the performance bond too. This helps to prevent a company from winning the job only to disappear, before the project can even begin.
Before you’ll be able to acquire your bid bond, you’ll first need to proceed through a pre-qualification procedure. During this process, you and your company will be closely analyzed and scrutinized to ensure you’ll be able to live up to your end of the bargain. In order to make this assessment, the judging entity will utilize an assortment of details and documents. Remember that the precise requirements will actually vary from one surety provider to the next. Some will be a little stricter than others, so you may or may not need all of the documents below.
- Organizational Chart – This chart should feature your company’s most prominent employees and their responsibilities. Also, be sure to provide resumes for each of these individuals.
- Business Plan – It is pertinent to prepare for the future, by formulating a business plan. Even if you do not need a surety bond, this is a crucial document. It should outline your company’s precise intentions, including the work you wish to perform, the size of the projects you’re willing to take, and how you’ll be able to obtain the work. You should also include objectives, such as growth and profit goals.
- Current Work And Historical Records – Also, the surety provider will want to know that your company is capable of completing projects and satisfying the client. Provide them with a breakdown of your current projects, as well as historical work records. Make sure you include the client’s credential, the date the project was completed, and the gross profit generated from the job.
- Continuity Or Completion Plan – The surety company will want to know that your company will be able to continue operations as normal, after the death or disablement of the company’s owner. This is where a continuity plan will enter the picture. Some surety providers will request the owner to list the construction company as the beneficiary of their life insurance coverage.
- Proof Of A Line Of Credit – Many companies will wind up running into temporary deficits. The surety company will understand this, but they’ll also want to ensure the company will be able to pull itself out of problems. This is why they’ll request evidence of your bank line of credit.
- References And Recommendations – Finally, the surety company will want to know that your company is capable of working well alongside others. So, make sure you’ve acquired a few letters of recommendation from project owners, engineers and subcontractors on previously completed projects.
The above documentation is the most common needed to prequalify for bid bonds and other types of surety bonds. Again, not all providers will make these a necessity, while others will demand these documents and then some.
Other Potential Requirements
In order to prove the worth of your company, you may also need to provide a handful of other documents. For your consideration, a handful of these will be listed below.
- Personal Financial Statements – Each company owner should be willing to provide the surety with a copy of their financial statements.
- Certificate Of Insurance – Remember that surety is not insurance! It will not protect you in the event of an accident, so you will still be required to obtain the necessary insurance to keep your company out of debt. This insurance must be obtained, before you’ll be able to get bonded.
- Questionnaire – The Contractor’s Questionnaire is one of the most common requirements. This is the case, because the document will provide the surety with a great deal of information regarding your company, including its history, background, and past work details.
- Application – Although it is not generally possible to submit the application form online, some sureties will require you to also submit it in paper form. The bid bond request form will contain basic information regarding your company and its operational history. The form will also require information regarding your bonding needs and the project in question.
If you’ve had any difficulty obtaining these documents, you should speak with your surety bond provider. They will be able to help you and will go above and beyond to make sure you have everything needed to move forward.
The specific qualification process for bid bonds will vary substantially depending on the surety provide you approach. Again, some will be a little more lenient than others. However, it is a good idea to keep this documentation on hand, so you can make the qualification process easier and more fluid. This will give you the ability to acquire the bond quicker and begin working as soon as possible.