Getting to know how to use bonds is critical for any business that is planning to work with the public sector, especially on construction projects. The risks – all the more when working overseas – are always high. Many projects are affected by unforeseen events, from weather to the failure of a supplier or delays in delivery of essential materials.
The purpose of a bond is to reduce the uncertainty and bring security to the financial aspects of the contract so that all parties can be on good terms and the project is completed. A Performance Bond is provided by the contractor to the developer, covering the damages your customer may suffer if you (as the contractor) cannot deliver on your side of the deal. A Payment Bond protects workers, material suppliers and subcontractors against non-payment. Both of these types of bond are essential to win public contracts.
Other types of bond can be used to help your business win and benefit from significant contracts with the public sector. For example, an advance payment bond will secure any monies paid by the contractor before work begins. A bid bond protects the project's owner if the bid is not honoured. In many public sector contracts a bid, payment and performance bond may be required by law.
We have worldwide experience of working with bonds in construction, manufacturing and other sectors where public sector contractors are placed. With our understanding of the dynamics of trade and the fine detail of bond management across the world, we take those simple principles and build agreements that are tailored for your needs.
Working with the public sector brings new financial challenges for contractors and suppliers. In many cases, especially for large projects, you will need to work with other organisations. We can help you to build successful partnerships so that you are able to win these contracts. By using our bonds and guarantees which have a high standing based on an AA- rating from Standard & Poor's, your financial risk will be mitigated. We can also assist your bidding team to analyse risks so that the bonding cover you put in place will be suitable for each contract and meet the requirements of your public sector client. The experts in our global network of offices bring in-depth knowledge and experience of local conditions and regulations so that you are able to bid for new contracts with confidence in every market.