Lance Surety Bond Associates, Inc.

Temporary work camp housing and procedures for installing and removing the structure will be provided through this bill. The housing put up through this bill must be removed within 120 days of it being vacated. A surety bond must be posted by the owner and provide this to the city or county where the work camp housing is installed. This is for the expenses that the city or county could incur by removing the housing, this includes any above-grade or below-grade infrastructure. The amount and form required for the bond or other security will be determined by the city or county.

Photo credit: jef safi (writing)

Contract bonds (also known as construction bonds) are required in most jurisdictions. A lot of times the benefits are overlooked and they’re seen as a hassle. But in fact, contract bonds provide essential guarantees to both parties involved in the contract.

Contract Bonds Provide Value to Clients:

They ensure the original bid.

A bid bond is a type of contract bond that guarantees a contractor will stick to the terms they originally bid. This type of surety bond is submitted along with the bid, guaranteeing the entire process, from start to finish.

They require the contractor to accept responsibility for mistakes.

We all know a project can require maintenance even after it’s complete. A maintenance bond serves as a warranty against defective materials or shoddy workmanship. Maintenance bonds are not always required, but it’s never a bad idea to protect your company from sticky situations once the contract ends.

They provide the contractor with a backup if it defaults.

If your contractor defaults, a payment bond will make sure everybody involved in the project gets paid and you don’t get saddled with that debt.

They guarantee that the client performs the work according to contract.

This is where a performance bond comes in. It’s another required bond that you’ll be happy to have on your side should the unfortunate event occur that the contract is not carried out correctly.

Contract Bonds Provide Value to Contractors:

The client feels safer and more assured.

Being backed by a contract bond provides a level of assurance to the client that the contract will be honored. Having this financial guarantee will help facilitate a better working relationship.

They guarantee completion of the project.

Sometimes you get near the end of a project and realize your company simply doesn’t have the resources to complete it. It happens to the best of companies, but you still want to see the project completed and know that all your hard work didn’t go to waste.

They provide assurance for subcontractors and vendors.

As you’re gearing up for a project, the best subcontractors and suppliers may want to see proof that you are holding a bond. It also serves as an assurance to them that they’ll receive their due compensation.

For contractors and business owners in a wide range of industries, surety bonds are an unavoidable part of operating their organization. However, that doesn’t mean they are forced to take on high-cost bonds which can cost hundreds or thousands of dollars more than what is necessary. The key to securing low-rate surety bonds is being informed about the process and knowing what is taken into account when determining your cost. Here are a few things to be aware of before you approach a surety company looking for a bond:

1. Check your credit

The first thing any surety company will do when you walk through the door is run a credit check on you and/or your company. Just like having a good credit rating can get you lower interest rates on car loans, they can also get your company lower costs for bonds. Before applying for a surety bond, check your credit and make sure everything is correct and up-to-date. One or two bad marks can deliver a serious blow to your overall rating. Fortunately, reporting errors or mistakes can generally be cleared up with just a few phone calls.

2. Balance your books

A large part of bonding consideration, especially when it comes to contract bonds, lies in whether or not your company has the capital necessary to complete a job. Have your in-house accountant comb through your company’s financials to make sure you actually have sufficient funds to see the contract through. If necessary, free up capital by selling off investments to keep a majority of funds liquid and easily accessible. Following responsible accounting practices at all times will ensure that you are able to present an accurate picture of your company’s assets to a bonding company.

3. Toot your horn

Having a well-established network of references and contacts can go a long way to getting you a lower bond rate. The amount of experience a company has in the industry where they are seeking work weighs into their overall credibility and reliability to carry out the contract. To apply for a bond, ensure you have proof of previous work which has been completed satisfactorily.

4. Make your choice

Different bonds come with different rules and regulations associated with them. The sheer number of different bond types can be overwhelming, so consult a professional to ensure you are applying for the bond best suited to your company. In many industries there are well-established standards for the kind of bond necessary, but new business owners may need a unique bond specially-tailored for their operation.

5. Read your rules

Bonding guidelines can vary widely by state, but some basic online research should give you a good overview of what you are required to obtain. Unfortunately, you don’t get brownie points for securing a surety bond worth more than your state’s required minimum amount. Save yourself additional costs by knowing the exact amount of bonding you need to operate in your state and locality. You can find this information online or call your state’s licensing board for details.

SB 490/860: Subdivision Bond

This bill will allow for the performance bond required for a subdivision or site plan application to be enlisted before or after the subdivision or site plan is recorded on the land records of the municipality. This is so long as no work begins until after the bond is posted.

HB 1275: License Bond – Sewage Treatment Contractors

Sewage treatment contractors must post a surety bond in the amount of $25,000 if the bond covers both plumbing work and subsurface sewage treatment work. Current law required a license bond to be posted in the amount of at least $10,000 for such contractors.

The Small Business Administration (SBA) has developed a Surety Bond Guarantee Program in order to provide smaller contracting firms with assistance in obtaining surety bonds. This program was designed to help small contractors with less experience have an opportunity to become bonded so that they may compete for jobs requiring surety bonds. The program will allow these smaller companies to prove their ability to meet job specifications, and perform well while making a profit. Strong performance with the help of this program can enable less-experienced contractors to build credibility, which could help them acquire surety bonds for future jobs based alone on their company

Despite a large spike in 2007 of state legislation for public private projects (PPPs), last year saw a significant decrease in the number of states that passed such permits. This is likely a result of the diminishing private funding for PPPs due to the current economic conditions within the United States. Additionally, recent reports from the U.S. House Transportation Committee on PPPs could have reflected negatively on them as well. However, international funding may still be an option seeing how PPPs were originally an overseas model. While many are concerned with the concept of PPPs in the United States, state officials should be able to protect public interest in PPPs with concession contracts, in which they have been able to provide oversight and address work force issues.

The only PPP-related enactment of 2008 was West Virginia