Bid Bond and Performance Bond Explained: Why You Need Them?
In the construction industry, acquiring a project and securing a contract for it is a long and tedious process. The process is also highly competitive because you have to compete with other contractors through bidding. It is also important to show proof of guarantee to the project owner that you can comply with the bid contract and also show guarantee that you can accomplish the job as laid out in the contract. Because of these, you need to obtain bid bond and performance bond guarantees which are proof that you mean business and you are capable of following the contract to the letter.
Bid bond and performance bond are two different surety concepts. A bid bond is a guarantee that you provide to the project owner. It signifies that you have the capability to take on and implement the project once you are selected during the bidding process. It provides peace of mind for the project owners because they know that their projects can be done based on the approved contract. Normally, project owners do not know if a contractor is financially stable or has the necessary resources to take on a project. But because of a bid bond, they will be more comfortable to award a project to a contractor knowing that if the project fails, they can collect compensation from the surety bond.
A performance bonds works just like a bid bond. However, a performance bond is geared towards actual project implementation. It is a guarantee to the project owner that you can accomplish the awarded project on time and based on the provisions of the existing contract. If you fail to finish the project because of several reasons, then the project owner will not be left hanging in the air. The owner can claim penal compensation from the performance surety to recover losses due to the failure of the project. A performance surety facilitates the smooth implementation of a project and serves as a cushion if the contractor fails to deliver.
If you want to obtain juicy contracts and ensure that project owners will trust your company, then you need to secure surety bonds. You can get a comprehensive surety bond if you have lots of projects lined up. On the other hand, you can also get an express surety bond to quickly get bonded. This is ideal if your company has infrequent bond requirements. You can obtain such surety bonds from Baldwin-Cox Agency. Baldwin-Cox is the leading and most trusted bonds and investment institution in Texas providing express and comprehensive surety bonds. You can visit its website to contact its customer representative and know more about surety bonds and how you can obtain them.
Getting surety bond is very important if you want your company to become competitive in the construction industry. In fact, in some localities, a surety bond is required so you can obtain licenses and permits. Most importantly, almost all project owners and developers will require a bond from you before you can bid on their projects.