Choosing the correct financial option and implementing a comprehensive risk management plan are vital to the successful completion of any construction project. Tying up your cash reserves as security is inefficient.
Bonds offer the project owner the security required for the duration of any contract while freeing up any cash reserves and cash flow
Range of bonds available including:
What service do we offer?
What information is required in order to obtain a bond?
Insurers may require some or all of the following:
The insurer requires a large amount of information as they need to assess the risk of a company getting into difficulty. (i.e the risk of the bond being called in).
How long will it take to get a bond?
Bonds normally take a least 2 – 4 weeks to arrange. If all relevant information is supplied by the contractor then this period can be substantially reduced. Once all information is supplied to the bond insurer, they will issue a quotation and a draft wording.
The draft bond wording will then need to be accepted by the employer. Once approved, the relevant original bond documents need to be completed by the contractor and sealed with company stamp. These documents are returned, payment is made, and the original bond is issued to the employer.
If the contractor has arranged a bond with a particular bond insurer before, then the bond can often be arranged in a fraction of the time.
What is a letter of intent?
A letter of intent is issued by the bond insurer at tender stage and this letter indicates their willingness to issue the bond subject to normal terms and conditions. Letters of intent are often required at tender stage for public contracts.
Why not arrange the bond with a bank?
A bank will normally reuquire some form of security over the guarantee. This can result in restrictions for the contractor when trying to raise further money from the bank to cover the day to day running of the business. This is not the case with a specialist bond insurer.
How do I know the bond will satisfy the employer (public authority)?
Before any premium is paid, the bond insurer will require written confirmation from the employer that the bond wording is acceptable. There may need to be some minor changes. Once the wording is agreed, the process can move forward to the next stage.