Each State Has a Different Bonding Requirement Concerning P3s
Public projects are increasingly being executed through public-private partnerships (P3s), i.e. a peternship between “a public government agency—which can be federal, state, or local—and a private entity.”. P3s offer some big benefits, such as more available funding and quicker execution of the project.
Each state have their specific methods of regulating P3s and that applies to bonding requirements too. Usually contractors are required to post performance and payment bonds, which make sure the contractor will not default and that subcontractors and suppliers will get paid.
When contractors look for projects, they need to make sure they are aware of all the states’ requirements in order to better calculate costs. For example, North Carolina requires “a payment bond for 100% of the construction value for the project”, while in Colorado just 25% is enough. Keep in mind, however, that sometimes requirements vary even within the states or between the various projects.
To read more about the bonding requirements in P3s, read the full article at Lexology.