Bond, James Bond
- Thread starter cartman
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- Massachusetts
bphgravity
Senior Member
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- Florida
Re: Bond, James Bond
To expand on what Bob provided, insurance is used for the purposes of accidents and damages. Bonds are provided to ensure that in case the contract is not fulfilled, monies are available to complete the work and to pay off vendors.
Most government jobs and those over $100,000 will require the bidders to provide both a license bond and performance bonds. This tells the builder/customer that in case you default, their project will still be completed. It also protects you from some litigation, meaning you can't be sued. But you probably still will be.
To expand on what Bob provided, insurance is used for the purposes of accidents and damages. Bonds are provided to ensure that in case the contract is not fulfilled, monies are available to complete the work and to pay off vendors.
Most government jobs and those over $100,000 will require the bidders to provide both a license bond and performance bonds. This tells the builder/customer that in case you default, their project will still be completed. It also protects you from some litigation, meaning you can't be sued. But you probably still will be.
petersonra
Senior Member
- Location
- Northern illinois
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- engineer
Re: Bond, James Bond
If a contractor goes bust, the bonding company finishes the work.
Most of the time we got out of the bonding requirements by making it an optional, seperate line item they could choose if they wanted to.
we often got out of bid bonds by sending a cashiers check or LC with the bid in the amount of a preagreed amount of the bid (typically 5%). If we failed to accept the bid, we lost the 5%. If they accepted our bid, they sent the amount back to us.
None of this happened very often. Just too expensive.
[ January 01, 2005, 07:54 PM: Message edited by: petersonra ]
The cost depends on a lot of things. Established and larger companies with better credit ratings pay less. I can't tell you what an average would be but I know a company I worked for once paid a little over 2%. I imagine for a relatively small project like you are talking about a bond would cost more like 10%.
If a contractor goes bust, the bonding company finishes the work.
Most of the time we got out of the bonding requirements by making it an optional, seperate line item they could choose if they wanted to.
we often got out of bid bonds by sending a cashiers check or LC with the bid in the amount of a preagreed amount of the bid (typically 5%). If we failed to accept the bid, we lost the 5%. If they accepted our bid, they sent the amount back to us.
None of this happened very often. Just too expensive.
[ January 01, 2005, 07:54 PM: Message edited by: petersonra ]
bphgravity
Senior Member
- Location
- Florida
Re: Bond, James Bond
A small percentage of performance bonds are ever paid so like an insurance premium, the holding company only pays on a few occasions but collects premiums on each contract and invests the money with interest. There is always a risk, but thats why credit and business history play into how much you pay. In most cases, the bond will only cover to about 75% of the contract anyway. In some cases, the bond will reduce in value as portions of the project are completed. Once the job is complete, a maintenance bond can be purchased to ensure warranty of work.
I have performed work for the local utility company on a contract of a little over $20,000 with a performace bond that only costs $50.
A small percentage of performance bonds are ever paid so like an insurance premium, the holding company only pays on a few occasions but collects premiums on each contract and invests the money with interest. There is always a risk, but thats why credit and business history play into how much you pay. In most cases, the bond will only cover to about 75% of the contract anyway. In some cases, the bond will reduce in value as portions of the project are completed. Once the job is complete, a maintenance bond can be purchased to ensure warranty of work.
I have performed work for the local utility company on a contract of a little over $20,000 with a performace bond that only costs $50.
petersonra
Senior Member
- Location
- Northern illinois
- Occupation
- engineer
Re: Bond, James Bond
bonded can also mean that the contractors employees have been bonded, so that if they steal from a customer, the bonding company will amke it good.
i can't imagine a performance bond of $50 on a $20000 project.
bonded can also mean that the contractors employees have been bonded, so that if they steal from a customer, the bonding company will amke it good.
i can't imagine a performance bond of $50 on a $20000 project.
petersonra
Senior Member
- Location
- Northern illinois
- Occupation
- engineer
Re: Bond, James Bond
I was down south some time ago and ran across an EC working in the same plant I was. The company name was James Bond Electric. IIRC, the owner's real name was James Bond.
I was down south some time ago and ran across an EC working in the same plant I was. The company name was James Bond Electric. IIRC, the owner's real name was James Bond.
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