Design Professionals often are asked by an owner/client to assist in obtaining the services of a contractor
to construct projects either through a public bidding process or by invitation. Typically, owners
wish to know how they can protect themselves in the event that a selected contractor fails to satisfy the
requirements for entering into the contract or does not construct the project in accordance with the plans and specifications.
In general, the answer is to use bonds issued by a surety. Sureties are a specialised segment of the insurance industry, with their own set of procedures for performing their specific role. Sureties write bonds that are three-party agreements between the surety, the project owner, and the contractor on the project.
Although there are different types of bonds, each of which is written to guarantee certain contractual
obligations, they all serve to guarantee the contractor’s duties to the owner—provided the owner fulfils
its obligations to the contractor. The most common forms of bonds used in the construction industry are
bid bonds, performance bonds, payment bonds, maintenance bonds, supply bonds, and subcontractor
bonds.
I can personally demonstrate to you where we used a contractor in the past where is was agreed three staged payments however due to the contractor suffering money problems and there accounts with the suppliers being frozen, they were demanding the last instalment before the job was finished and the work was substandard which did not last and we had to get redone a couple of years later.
Please contact ARC Brokers Services on 01529 675 021 or email melanie@arcbrokerservices.co.uk for further information.
