Construction projects have many phases.
In most cases once a project is "green lit" by a project owner and the government that controls permitting, the project is put out for the bid process.
The project might be a private or a government project, but if you're interested in winning the contract you'll likely need to go through this bidding process.
Most of the time, one of the requirements for submitting a bid is purchasing a construction bid surety bond.
In this short post you'll learn:
- What a bid bond is
- How much a bid bond costs
- What happens as you're getting your bid bond
What Does a Bid Bond Do?
A bid bond is required to protect a project owner from receiving bids:
- That are too low to be realistic
- Impossible for the contractor to fulfill because of contractor experience or size
- Attracting random bids from too many inexperienced contractors
Think about it from the project owner's perspective.
The project owner wants to get their project:
- Started on time
- Managed by an experienced general contractor
- Completed on time
- And completed at or under budget
Getting a low bid is important but it's not the only factor that determines a construction project's success.
If the project owner receives a low bid and accepts the bid, but the contractor backs out of the contract because they know they can't complete it, the project owner can make a claim against the bid bond for:
- Wasted money vetting the contractor
- Wasted time and money having to restart the bid process
Simply put, the bid bond protects the project owner from receiving bids from inexperienced contractors who are not capable of completing the project.
How Much Does a Bid Bond Cost?
When it comes to purchasing a bid bond, things are not like most construction surety bonds.
We are Surety Bonds Direct, a specialized surety agency.
We charge a flat fee of $100 for a bid bond regardless of the size of the project.
If you win the bid, we'll apply the $100 to the purchase price of the performance and payment bond.
When you purchase a bid bond, you're not just purchasing the bid bond, you're also getting pre-approved for the performance and payment bonds.
One Bond Qualification For The Entire Project
Most construction projects have a tight timeframe with completion milestones.
To avoid unnecessary delays, when you purchase your bid bond, we'll also qualify you for the performance and payment bonds.
Read our short post about how performance bonds fit into construction projects to learn the details.
In short, the performance bond holds you accountable to the contract and completing the contract on time.
The payment bond holds you accountable to paying the subcontractors you'll hire to complete the job.
By getting qualified for the performance and payment bonds, you're in position if and when you win the project.
If your bid is accepted, you just need to pay for the performance and payment bonds and you can immediately begin working on the project.
How To Get Started With Your Bid Bond
Getting started is easy.
Just complete our online quote form or call a bond specialist at 1-800-608-9950.
Make sure you have the following information:
- Bid specifications
- Project details including projected cost
- If there is a specific bond form the project
- If the project is over $500,000 you'll likely need to submit your company financials, but not always
Click here and complete our online quote form. Provide as many details about the project as you can.
If you'd rather speak directly to a bond specialist, call 1-800-608-9950.
Learn more about the completing the construction project process by reading about:
- Contractor license bonding
- Performance and Payment bonds
- Maintenance bonds
- What is a bonded contractor?
If you have any questions, please contact us today and we'll help make sure you have the information you need to get this done.
