If your new to bonds, your in the right place. Its confusing, we know. Why is the general contractor or owner of the project requiring a bid or payment and performance bond? What do I need to do to get bonded? All good questions and we have the answers. Since our company’s inception, we have assisted contractors throughout the State of Florida obtain their first surety bond, and have counseled in the growth of their program to where surety is no longer a hurdle, but a tool they use to grow their business, and separate themselves from their competition.
In an effort to keep it simple, bid, payment & performance bonds are all forms of a guarantee. Bid bonds guarantee the contractor will enter into the contract if low or awarded. Payment bonds guarantee all subcontractors and suppliers are going to get paid, eliminating any lien issues for the general contractor or owner. And the performance bond guarantees the contract is going to be performed as per the specifications in the contract.
So how do our surety companies evaluate the potentially bonded contractor? Remember, the surety is guaranteeing the contractor is either entering into a contract (bid bond), paying all subcontractors and suppliers (payment bond) and guaranteeing the performance of the contract by the bonded contractor (performance bond)?
Surety companies evaluate potential bonded contractors based on the three “C’s” of surety:
- Character: Is the potentially bonded contractor of high integrity?
- Capacity: Does the potentially bonded have the ability and experience to handle the contract?
- Capital: Does potentially bonded contractor have the financial strength to handle the total backlog of work?
Although the surety pre-qualification process can be rigorous, we have a proved track record of success of taking non bonded contractors thru the grind of pre-qualification, and into multi million dollar surety programs.