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In the current construction industry, managing risk is of utmost importance for developers. One effective tool for managing risk is a performance bond.
What Really Is a Performance Bond?
A performance bond and new build warranty is a type of surety bond commonly issued by an insurance company or a bank in order to guarantee the successful completion of a construction project by a contractor.
The use of performance bonds is becoming increasingly prevalent, as they offer peace of mind to both the developer and contractor, and act as a guarantee for the satisfactory completion of a project.
Some Stats About the Necessity of Performance Bonds
An article featured in Construction News illustrated that:
. Almost 36 construction businesses fell into administration by February 2020
. 246 construction businesses were involved in different stages of liquidation
. 82 of these companies have formally held meetings with creditors
The Advantages of a Performance Bond
The benefits of performance bonds are clear. When bidding for contracts, the ability to offer a performance bond is essential, as not doing so can result in exclusion from the tendering process.
This type of bond is an alternative to bank bonds and letters of credit, which often require the allocation of working capital for the duration of the contract.
By investing in a performance bond, contractor liquidity is increased, allowing for more opportunities to bid for tenders. Performance bonds are often a requirement for government or infrastructure projects, making them an indispensable tool for the construction industry.
Performance Bonds for Construction
Construction disputes can be costly and time-consuming, but performance bonds can help minimize these risks, keeping developers and contractors focused on building.
At Advantage, we have a proven track record of securing performance bonds for our clients. Our goal is to provide the best possible bond for your project at the best possible price, without any vested interests.
Our clients have seen great success with our services, reducing the dependency on bank borrowing and freeing up their own working capital. Let us help you manage your construction risks with a performance bond.