Luke Bochansky

(623) 533-3534

Performance Bonds

Contractors may be required by the hiring party, or project owner, to provide a performance bond before they start work on a job. A performance bond ensures that a Contractor will perform the duties as outlined in the construction contract. If there is a failure to perform the job as outlined in the contract, the hiring party, known as the Obligee, can file a claim against the performance bond to avoid monetary damages as a result of the failure. Frequently, Performance bonds are issued in conjunction with Payment bonds (Performance & Payment) to ensure that the hired contractor, known as the Principal, will not only perform his duties per the contract but that he will also pay his/her suppliers or sub-contractors. Together, Performance & Payment bonds are the most common construction bonds used.

Cost

The required premium for the bond will vary dependent upon a number of underwriting or pre-qualification factors including, but not limited to, the project bid amount, financial strength of the Contracting Company, financial strength and credit history of the owners and historical track record of project completion by the Company. Surety Underwriters factor in this risk data to formulate the cost of the bond. For established Contracting Companies with strong financials, the expected cost can be 2 to 4% of the bond amount.

Timeframe

The time it takes to obtain your Performance Bond is dependent on the size of the job and number of underwriting requirements. Generally, if a job is less than $400,000.00, the application and underwriting process can be completed in one, or two, business days. Jobs exceeding $400,000.00 generally require more underwriting information may take more than two business days.

Performance Bond Lines

We can open a bond line for you. After a pre-qualification process, we can approve a bond line for you up to a pre-specified dollar amount based on business and personal financials and Company track record. This will save you time in the future and allow you the confidence to bid on larger jobs for continued growth of your Company.

History of Contract Bonds

The earliest form of Suretyship can be traced back to Mesopotamia in 2750 BC. Suretyship is referenced in the Bible, the Magna Carta and the Shakespeare play, "The Merchant of Venice". In the U.S., the requirement for Surety Bonds was originally enacted by the Heard Act in 1893. The most recent update to the original Surety Bond requirement is The Miller Act. The Miller Act requires a Surety Bond be posted for the construction, alteration, or repair of any public building or public work of the Federal Government for contracts exceeding $100,000. While The Miller Act covers Federal owned properties, individual states have adopted similar acts, often referred to as "Little Miller Acts".

By: Luke Bochansky

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LukeBochansky

Luke
Bochansky
(623) 533-3534

About This Site

SuretyBonds.Biz is a website for Viking Bond Service, Inc. producers to provide information about frequently requested surety bonds in their words. Viking producers specialize in surety bonds of all types. Since bonds are the sole product provided by Viking, the producers are an excellent resource for information and assistance.