Construction Bond Glossary
Construction Bond | Bid Bond
Bid Bond: Guarantees the obligee that the construction company will honor its bid. Usually required by contractor before bid takes place.
Construction Bond: Guarantees required before construction company is allowed to bid or is awarded a large construction project. This finanical guarantee assures that the bills for the construction project will be paid. Three types of construction bonds are: bid bond, payment bond and performance bond.
Financial Guarantee: Consists of cash deposits, payments, surety bonds, or other irrevocable agreements that guarantee the construction of structural measures.
Back to Top
Individual Sureties: Individuals may act as sureties to satisfy bonding requirements on federal projects if they have certain acceptable assets in the required amounts to support the bonds.
Payment Bond: Guarantees that all sub-contractors and suppliers receive payment for the products and services the provided on the construction project.
Performance Bond: Guarantees the construction company will complete the contract according to its terms including price and time.
Back to Top
Risk Management Company: A company that manages the risk of others using a variety of instruments such as bonds and financial guarantees.
Surety Bond: A surety bond is a guarantee, in which the surety guarantees that the contractor, called the “principal” in the bond, will perform the “obligation” stated in the bond.
Back to Top
|
