When working on construction projects within the arena of public works, it’s imperative that you protect your company by being prepared. As far as the financial elements are concerned, a public works payment bond is the ultimate solution. Pinnacle Surety can support you through the process.
Call: (844) 612-7238
What Is A Public Works Payment Bond?
A government performance bond is a type of contract payment bond that guarantees that the main contractor on a public project will meet all payment requirements to subcontractors, suppliers, workers, laborers, partners, and associated personnel on the project. This is a key feature for ensuring the works will be completed to the expected standards and be on time and budget.
Public works can be defined as those projects that are government-funded and support the construction or upgrade of public facilities. Common examples include hospitals, bridges, highways, and dams and cover works funded by local, state, and federal appropriations.
Payment bonds for public works operate in a virtually identical manner to how they do on private jobs, only they are often deemed a legal requirement of the state or territory – whereas they won’t usually fall under this category on the private works. They are a three-way contract between the project owner, contractor, and subcontracting sureties.
As a rule of thumb, payment bonds are established in conjunction with performance bonds to ensure that the public works projects are built to meet all expectations while premiums are set to 1-2% of the project cost, although this figure can vary depending on a range of financial factors. Influential features include credit history and project size.
All payment bonds – public or private – should cover the full amount of pay due to all subcontractors working on the project, even though the likelihood of needing a 100% payout to all contractors is very slim.
Benefit From A Public Works Payment Bond
Ever contractor looking to win more bids in the public works sector can benefit from a public works payment bond. When working in CA, it’s not only beneficial – it’s essential.
California Civil Code § 3247 states that contracts valued at over $25,000 require payment bonds, protecting subcontractors as they can make a claim against the surety if they are not paid for their work (or supplied materials) relating to a state or government project. Claims can be made at any time but must not come any later than six months after the Stop Notice deadline.
Subcontractors aren’t the only beneficiaries. As the main contractor, you’ll instantly satisfy a legal obligation, which leaves you able to bid for contracts with optimal levels of confidence. Furthermore, it makes the project more attractive to subcontractors, opening the door to a wealth of quality talent – ranging from laborers to partners.
As an honest chief contracting company, it’s easy to dismiss the public works payment bond as little more than a financial tax. In reality, though, a host of unforeseen circumstances could rip the project apart at the seams. The knowledge that this type of surety is in place guarantees that works will be completed even when those dangers threaten to derail the venture.
Last but not least, the confidence and peace of mind gained can become a key ingredient in the bid to experience a smooth project. Given that every contracting company craves this outcome, a payment bond is one of the most important features of any public works contract.
Get The Right Public Works Payment Bonds
In many ways, all public works payment bonds are fairly standardized, at least in terms of their function. However, there are still a number of questions that should be used to drive your decision regarding which broker would be best:
- Does the surety bond broker have a solid reputation in working with sureties and, crucially, payment bonds for public works?
- Will the surety bond broker go the extra mile to ensure that the public works payment bonds are offered at the best premiums available?
- Will the public works payment bond actually protect you (and your subcontractors) should unforeseen circumstances result in claims?
For all of those reasons, and many more, Pinnacle Surety is the ideal solution. We have been one of California’s premier services for 25 years and boas a team of internal Surety Bond Underwriters that expedite the bonding process and ensures our clients get the right bond on time. Our goal is to make the procedures as simple and affordable as they can be, allowing you to win more contracts and gain the financial and emotional reassurances you deserve.
Furthermore, we combine our practical expertise with an in-depth understanding of the local state requirements, giving you a far greater outcome than choosing a generic broker. We specialize in public works payment bonds for Californian contractors. When you want the best results in this arena, we are the Pinnacle.
What Other Financial Surety Bonds Are Available?
For any construction company aiming to protect themselves from all monetary matters, it may be necessary to support the public works surety bond with one or several associated products. Pinnacle Surety are experts in the field, providing help with each of the following:
Protecting your financial integrity throughout every stage of all future projects has never been easier.
The Final Word
When bidding for projects in California’s public works arena, a bid without a payment bond in place will be ignored by the government or state funding the project. Frankly, then, you don’t have much of a choice as to whether it’s needed.
However, the fact that it brings many benefits for the project, as well as your management and financial security, should actively encourage you to take out this type of protection, even without the legal requirements.
Whether preparing to bid for your first public contract or wanting to upgrade to a better surety provider, give Pinnacle a call on (844) 612-7238 today.
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