Protecting yourself when undergoing a construction project is very important and we provide construction bonds to give you the peace of mind that you need. There is always the potential for problems during a construction project and if you don’t have the right protection in place, you can easily find yourself in financial trouble, which is why it’s important that you understand the different types of construction bonds available to you, particularly construction completion bonds.
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You may be wondering why you need construction bonds in the first place. But even if you have planned the project and worked out all of the fine details, that doesn’t mean that you won’t run into issues. Construction is unpredictable and there are a number of things that could go wrong.
If you are working with a contractor that you have never worked with before, you don’t have any guarantee that they are reliable and they may let you down. In some cases, contractors fall behind due to their own shortcomings but they can also be slowed down by outside events, like bad weather.
Cash flow problems are another common issue that arises during a construction project. Regardless of how well you budget, there are always things that get missed and extra costs that come up once the project is underway. If you start running out of cash during the build, construction bonds can be very valuable.
Using construction bonds will protect you from these issues and ensure that you can actually complete the project as planned.
Different Types Of Construction Bonds
There are a number of different types of construction bonds that you may want to consider before embarking on your project.
Bid bonds are a type of bond that gives you protection against contractors that may let you down. They guarantee that if you accept a bid from a contractor, they will carry out the work as agreed.
If a contractor does not make payments to suppliers and subcontractors for materials and work carried out, you may be liable as the project manager. But payment bonds protect you from this and help you to avoid difficult situations that arise when a contractor is unreliable.
Performance bonds ensure that work is completed to an agreed upon standard and the quality of the work is adequate. Performance bonds, payment bonds and bid bonds all come under the umbrella of contract bonds and are often combined together to give you the protection that you need.
Subdivision Improvement Bonds
A subdivision improvement bond is used in public works projects to ensure that a developer carries out improvement work on the surrounding area as agreed. This includes things like gutter and drain management, pavements and street lighting.
Although these specific types of bonds all give you protection during a construction project, completion bonds for construction are the best way to get the comprehensive insurance that you need.
What Is A Construction Completion Bond?
A completion bond is a type of surety that can insure monetary compensation if a construction project is not finished to the agreed standard. Completion bonds provide more protection than performance bonds because they offer your protection against projects that are completed late, projects that are not completed at all, and projects that are completed to a poor standard. This completion guarantee gives you the peace of mind that you need and protects your finances in the event of problems during the project.
What Is The Difference Between A Completion Bond And A Contract Bond?
Many people are unsure about the differences between a completion bond and a contract bond as they appear to be very similar. Both protect you in the event of problems with the project or the contractors, so why should you use a completion bond instead of just using contract bonds?
The major difference between the two is that a completion bond refers to the project as a whole as opposed to a specific contract. If you take out a series of contract bonds, this may protect you in the event that certain parts of the project are completed late or the work is not up to standard. However, a completion bond ties all of the different aspects together as a whole and incorporates multiple contracts.
What Are The Benefits Of Completion Bonds In Construction?
The major benefit of a construction bond is that they simplify the process. Taking out multiple contract bonds to cover different aspects of the project can sometimes mean that you don’t have comprehensive cover and there may be certain problems that you are not protected against. A completion bond ensures the completion of the entire project as initially planned and you are protected against anything that falls short of that.
Construction projects involve a lot of different people and you will most likely have multiple contractors and subcontractors, as well as a selection of different suppliers working with you on the project. Using a completion bond is a great way to tie all of those different elements together and strengthen the relationship between all of the different parties that are involved. This helps to improve overall confidence in the project and alleviate any worries that people may have, so things run a lot more smoothly. Whatever kind of construction project you are running, having that completion guarantee in place gives you the protection that you need.
Construction Completion Bonds From Pinnacle Surety
If you are looking for bonds for an upcoming construction project, it’s important that you work with experienced completion bond brokers. Here at Pinnacle Surety, we have over 25 years experience providing bonds of this kind for construction projects. Our expert team can give you all of the advice that you need and take you through the whole process, supporting you every step of the way. When you come to us for your construction completion bonds, we will ensure that you have the working partnership that you need and you have a lot more faith in the success of your construction project.