Completion guarantee is really a performance bond or sometimes call a completion bond. The completion guarantee or performance bond is a guarantee by an bonding company that the producer or contractor will complete and deliver the contract in full.
The contractor will agree to complete the job for the owner of the contract and if he does not complete the performance of the contract then the bonding company shall assume all his rights and responsibilities to finish the contract.
Since the bonding company is guaranteeing the completion of the contract then they are entitled to charge a fee for that services. Most of the fees are charged on a flat percentage of the contract and if if funds management is required additional fees may also be charged.
Most completion bonds or performance bonds require daily flow of productions paperwork,cash flow reports and cost reports. This allows the company to maintain some type of control over the completion time of the job. It also controls cost and allows the company the ability to see how the job is progressing.
The completion bond or the performance bond does not require all the paperwork if they use funds control.The funds manager controls all the payments and pays all the bill thus the funds manger is then responsibility to make sure that all paper work is complete.This relieves all the pressure from the contractor and guarantees the owner of the contract that the necessary forms are being filed correctly.
The completion guarantee or performance bond usually has a charge of 3-5% of the total amount of the job.
The completion of performance bonds are usually use for first time contractors and first time users of bonds.
The first times user of the bond needs to be educated in how the bond works and what type to paper work that the have to furnish the bonding company tin order to qualify for a completion bond or performance bond.
The key to the completion guarantee is the risk assessment process that is careful scrutinized by the companies management team to make sure that the contractor has the ability to compete the job. It they feel that that the contractors has the ability to finish the job then the bonding company will usually go ahead and approve the completion guarantee or performance bond for the contractor.
in most cases if the contractor is a first time user of a bond then the bonding company will want them to be enrolled into a funds management control program.
If you need help in finding a funds management group you make contact Ric Cline at 719-588-3601 or Anthony Gardunio at 1-505-702-1366. Both would very much like the oppurintiy to help you the the bond that you need.
Performance and Payment Bonds for Miller Act
The Miller Act has two concerns in regards to doing Federal government construction projects. That is that they must have payment and performance bond on each contract that is issued by the federal government.
The government has made it mandatory that all jobs have performance bonds because a contractors abandonment or other non-performance of the contract may cause critical delays for the jobs. They fell that this just adds additional cost to to the government contracts that needs to be covered by the contractor or the bonding company. The federal government fells that this weeds out all of the irresponsible contractors and helps defray the additional cost to the project.The Miller Act also allows the bonding company to sue for right of indemnification for non-performance.
If is was not for the Miller Act then subcontractors and material suppliers would not work on federal projects knowing that the sovereign immunity prevents the establishment of a mechanic’s lien. Without this act the this would decrease the competition and drive up the cost of bonding for federal projects.
Contracts to which the Miller Act does apply
The contact is for any federal government job which includes the alteration or repair or any public building or public work that is done by the federal government. The Miller Act requires that each job that is over 100,000 dollars is required to have a bond in force in order to do the job. However, the federal regulation or FAR only required that it be over 150,000 dollars.The act also requires FAR(Federal Acquisition Regulation) to established alternative payment protection for jobs from 30,000 dollars up to 150,000 dollars.That regulation is determined by the project manager of the contract. The Miller Act only applies to federal ,stated and public work throughout the country.
Must post a Performance before the job is awarded
Prior to the awarding of any government project the contractor must furnish a performance bond that is adequate and issued by a company that is acceptable to the contracting officer of the government project.
Must post a Payment Bond Before the Job is awarded
The contractor must also post a payment bond that satisfactory to the project manager for the protection of all supplies and material cost that are associated with the job.
The enforcement of the Miller Act how allowed the subcontractors or material suppliers to file a civil action. The time period is 90 days after they have furnished labor or materials on the job. The civil action must be against the payment and performance bond. The indemnification to the bonding company must come from the contractors assets if necessary. They only have one year to file a civil action claim against the performance and payment bond, after that it is null and void.
Many contractors find themselves needing Contractor Bonding and dont know where to turn, so give us a call and we will point you in the right direction.
You can start with your bank if you have good credit and strong cashflow, however in these tight times many of our clients dont meet the banks requirements for contractor bonding and that is why they have turned to us.
Contractor Bonding is critical for growth, not only for your business but our nation. Because with our consrtuction growth, our economy suffers.
We are proud to say we stand behind our partner clients, and help them in times when they need the help with Contractor Bonding.
Most construction contractors know the process of obtaining a performance and payment bond, but they may not be aware of the legal relationships. The contractor is the (principal) and the owner is the (Obligee) in most of the guarantees that come from the bonding companies. Most lawyer’s that work with contractors are aware of the rights of the obligee and that of the principal but still lack the knowledge and experience about the process of obtaining a bond. Lets try to see if we can explain how and when a bond is needed on federal,state and private projects.
A surety bond is not an insurance policy. A surety bond is a guarantee, in which a bonding company guarantees the contractor (principal)that he will perform his obligation that he is required to do because of what the contract so states.
When you give a bid bond that just means that the principal a long with the bonding company is going to honor you bid. The performance bond is stating the the principal will complete the project as stated in the contract. The payment bond is to pay the suppliers and materials as well as the subcontractors. After all the conditions of the bond have been preformed then the bond conditions usually are void. If the bond does not state that condition then it will stay in full force.
If the contractors fails to perform the conditions of the contract then both the contractor and the bonding company are jointly liable for the conditions of the contract. Both parties can be sued and either party is responsible for the entire contract plus penalty. If you have penalties for late days this could be above and beyond the amount of the bonds issued.
If you are general contractor then the obligee is the owner of the contract and you are the principal. If your are a subcontractor then the obligee might be the general contractor. The people or firms who are entitled to sue on the bond ,sometimes called beneficiaries of the bond and are usually defined in the bond conditions in those states and federal statutes that require bonds. To make it more clear is that they will name who can sued for not performance.
In summary if you get the bid bond in on time and your are the low bidder you may have a chance to get the job. The owner always has the right to choose who he wants to do the bond even if he choose the next bid.
The performance and payment bond need just tell someone that the bonding will step in an finish the job if the contractor does not, This give them security that need to have the job completed.
CONSTRUCTION BONDING FOR SMALL,MINORITY AND NATIVE AMERICAN CONTRACTORS
OICM insurance company has a location in La Vegas Nevada,We operated in all states because we are Federal Regulated. President Obama calls this his one state compliance rule.
Our main goal is to put as many deserving small, minority (men and women) as well as Native American contractors on as many projects as possible. With the assistance of qualified construction team and funds management control we have the winning combinations to help many small, minority contractors, with our CONSTRUCTION BONDING program.
We have alternate programs and resources in order to facilitate the necessary support for some many qualified and deserving minority contractors that have been neglected over the years.
Adequate protection is need for the obligee (owner) of any project and with the combination of a qualified contractor, a bonafide bid price, funds control agreement(Tripartite) in force and if necessary a valid payment and performance guarantee does protect the owner.
The Company policy is to offer a total package for a qualified contractors who need CONSTRUCTION BONDING. Work with the contractor from time of the application to the final walk thru. Help monitor the entire project and review the contracts for exclusions and unforeseen extras. Finally to protect the project owner with fund management controls to make sure that all material and suppliers have been paid, which in turn protects the surety.
The strength of your contract and ability to perform your trade. With decent profit in the contract and enough liquids funds to get you to the first draw basically qualifies you for are program. We do not judge you solely on your credit history or financials but on the ability to do the work. There are no fees upfront for our services. We believe in getting paid only if we are able to provide the services requested by you.
The cost o the bond is related to the strength of the job and the ability that you have to produce a sucessful outcome. If there is a need for funds managemanet control then a separated charges shall apply. The price is very negotiable but usually stats in 1%-31/2% range and goes up 1 1/2 % for funds management control. Once again this negotiated at the time of application.
If you are havein a hard time getting a performance and payment bond which most contractors call CONSTRUCTION BONDING then you need to contact Ric Cline at 1-800-772-9904 or direct to 719-588-3601. He is avabale 24/7 if you need him.
Construction Performance Bonds are critical to a successful construction operation, yet many contractors do not have the best credit or lack the cash to get the big jobs.
That is where we come in, our Construction Performance Bond program is a win-win , and allows your business to grow.
We specialize in:
- Construction Bonds
- Contractors Bonds
- Tribal Bonds
- Bad Credit Contractor bonds
We also offer excess bonding, for jobs your traditional provider can not provide, or you have gone over your limit and need an extension.
What our customers think about Construction Performance Bonds
Construction Performance Bond
If you are getting ready to bid, or have won a bid we should be your very first call.
9 out of 10 of our clients we have placed have been turned down in the past by a bank or other construction performance bond source, and we have been able to help them all.
Our funds control management system, will also allow you to focus on what makes you money and leave the cash handling up to us.
We are here to help you grow your business. We understand what it takes to grow in today’s economic climate and that the construction performance bond is a critical part of that success. Give us a call today to get a no obligation quote, or complete the Quote request form on the right side of the screen!