Are You Looking To Take Bids For A Commercial Construction Project? Two Reasons You May Want To Require Bid Bonds
If you are overseeing a large commercial construction project, one of the early steps in launching the project is finding a contractor to build the company. In order to do this, you may be taking bids. As you take bids, you may want to require those submitting the bids to have a bid bond included with their proposal. In the past, only government projects required the use of bid bonds. But now it is becoming more common for those overseeing large construction projects to require them. If you are not sure if you should require them, learning the benefits will help you to make a decision. Here are a few of the benefits of requiring bid bonds when taking bids for a commercial construction project.
Helps Insure Your Project is Completed at the Quoted Price
A bid bond is given to you, the person overseeing or paying for the commercial construction project at the time the bid is made. This is a financial guarantee that the company bidding on the job can complete it as discussed and for the amount of money that they have stated in their bid. Without a bid bond, a construction company can bid low and then raise the prices as construction continues. There have been many financial projects that failed because the investors thought they were paying one price, and then the project ended up going millions of dollars over the estimate expenses. A bid bond helps ensure this won't happen with your project.
When a company gets a bid bond, they are putting up a certain amount of the money with a bonding company. If the project ends up going over, you are given the money to complete the project out of this bond, basically guaranteeing you that the quoted price is the price you will pay.
Reduces the Amount of Investigation You Need to Do in a Company
The other major advantage to a bid bond is that it reduces the amount of time you need to spend investigating or researching companies. When you are hiring a company for a job, you have to do a lot of research to ensure that they are not taking your money and running, or that they can complete the project based on the price they quoted. If they have a history of underbidding, you may have wanted to stay away from them. However, know that their bid is financially insured with an outside company, you have less risk and can spend less time investigating the company you are looking to work with.
There are many benefits to accepting bid bonds. Taking the time to learn about these benefits will help you see how they may help protect you as you take bids on your commercial construction project.