Category: Construction Bonding Specialists

Construction Bidding Season is Near; Are You Prepared?

Image of happy construction workers.

We are fast approaching the construction bidding season. Contact Construction Bonding Specialists, LLC – we are ready to guide you through pre-qualifying for your bond applications for municipalities, schools, and public works that will soon be opening.

Our specialty is helping you secure the construction bonds you need. We’ll decipher the paperwork and make recommendations to ensure you stand out!

Construction Bonding Specialists offers a variety of surety bonds, including:

  • Bid Bonds
  • Performance and Payment Bonds
  • License and Permit Bonds
  • Maintenance Bonds
  • and more!

Construction Bonding Specialists knows what is required to expedite the process. We have years of experience in the industry, giving us an advantage you can count on. Our professionals can assist you whether you need a simple bond or something more complex.

Visit our website to download the most common bond applications and forms. If you’re unsure how to get started or wish to discuss further, contact us today for prompt follow-up.

BONDS ARE ALL WE DO!

Contact us today to discover how we can assist you.

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a dedicated surety-bond-only agency with decades of bonding experience, we strive to discover surety solutions for all types of cases, ranging from routine to challenging. Contact us online or call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: www.cpsmi.com

A 2024 Outlook on the Construction Industry: 7 Emerging & Continuing Trends

Image of the road ahead for 2024.

Heading into 2024, construction professionals encounter familiar hurdles: recession worries, ongoing inflation, higher interest rates, labor shortages, and supply chain issues. Despite these challenges, there are strategies to navigate them successfully and position your company favorably. Here are seven key trends and solutions to consider.

Labor Shortages Remain

The construction sector faces a growing skilled labor shortage, which is expected to intensify in 2024. In 2023, the industry needed over half a million extra workers to meet labor demands, exacerbated by fewer young people entering trades and an aging workforce, with nearly a quarter over 55 years old. The industry must enhance its appeal and recruit more effectively to combat this. Strategies include partnering with trade schools and high schools, engaging with trade associations, offering on-the-job training, and retaining talent with incentives for career growth and a supportive work environment.

Increased Subcontractor Default

In the past year, subcontractors faced over $97 billion in extra costs, leading to cash flow issues and heightened risk of default, a problem compounded by labor shortages, rising interest rates, and recession fears. This has resulted in increased claims due to subcontractors not meeting their financial obligations.

To address this, contractors should thoroughly vet subcontractors, requiring surety bonds, seeking references, assessing experience, and discussing financial stability. Leveraging surety relationships for subcontractor assessments and ensuring favorable contractual terms, such as “paid-when-paid” clauses, can also help. Diversifying the subcontractor base reduces dependency on a few and minimizes risk.

Unpredictable Interest Rates

Rising interest rates have exacerbated cost inflation in the construction sector, with financing becoming more expensive and driving up the costs of materials and labor. This has affected project budgets, with over 82% of construction materials experiencing price increases averaging 19% since 2020.

To counteract these challenges, strategies include reducing exposure to interest rates, avoiding debt, managing cash flow wisely, and securing favorable contract terms. Paying for equipment and materials in cash, negotiating better terms with suppliers, adjusting retainage rates for improved cash flow, and seeking upfront payments for materials to minimize reliance on bank financing are effective approaches.

Lingering Inflation

The construction sector is facing significant cost increases in materials, labor, insurance, and administrative expenses, further stressed by the volatility and unpredictability of material prices. Despite a decrease from the 8% inflation rate in 2022, economic uncertainty remains in various construction markets.

To navigate these pressures on profit margins, it’s advisable to work closely with insurance brokers and agents to reassess coverage and secure the most advantageous insurance rates, using a clean claims history as leverage. Additionally, a detailed review of expenditures, especially administrative costs, and regular financial monitoring are essential for identifying opportunities to manage or reduce expenses more effectively.

Continued Pandemic Hangover

The construction industry still faces challenges from the COVID-19 pandemic, including delays in project starts and funding uncertainties, which have led to extended timelines and difficulties in backlog management. Supply chain disruptions and funding issues have impacted both private and public projects, with nearly 40% of contractors in 2022 reporting project postponements, and over a third experiencing cancellations or indefinite delays. In 2023, 13% noted postponements in the year’s first half.

To minimize these issues, it’s crucial to meticulously document project delays and management strategies to safeguard against liabilities such as liquidated damages. Documentation should cover delays outside contractors’ control, like late material deliveries, to prevent unfair penalties.

Before engaging in contracts, verify project financing in the private and commercial sectors, requesting proof of funds to lessen the risk of delays from financial issues. Work closely with suppliers to understand material lead times, identify potential shortages, and secure materials early, even at a higher cost, to prevent delays. Exploring alternative materials with project owners can also provide solutions to potential scarcities.

Increase Private Equity Firm Buyouts

The trend of private equity firms purchasing construction companies has risen significantly, with their involvement in the sector increasing from 16% in 2016 to 41.5% in 2021. While the influx of capital from these acquisitions can be positive, the long-term effects are uncertain, particularly regarding the sustainability of these firms without the original owner’s expertise. The future of these new portfolio companies—whether they will prosper, struggle financially, merge with other entities, or take different routes—is an ongoing concern with unpredictable outcomes. Furthermore, the temporary nature of many portfolio companies under private equity could lead to conflicts in financial management practices with creditors, surety companies, and banks.

It’s advisable to secure key personnel through contracts of a particular duration, ensuring the retention of essential expertise and knowledge for the company’s continuity and stability during transitions. It is also crucial to align the business strategies of the acquired construction company with partners like sureties and brokers to maintain smooth operations and relationships.

Repurposing Large Construction Projects

Thanks to the Infrastructure Investment and Jobs Act and rising construction demands, a diverse mix of projects is on the horizon, shifting focus from traditional retail and office spaces to warehouses, multifamily housing, and mixed-use developments, including transforming old retail locations into warehouses. Despite challenges from higher interest rates, the construction sector is poised for growth, with significant gains expected in certain areas.

In 2022, U.S. construction projects reached nearly $1.8 trillion in value, a figure projected to decline by 2025. Nonetheless, spending has been on an upward trend, driven by both residential and non-residential construction. The U.S. Infrastructure Bill, allocating federal funds to various projects, is set to boost demand for construction services, equipment, and materials.

For businesses looking to navigate these changes, starting with smaller projects can provide valuable experience in new construction areas. Partnering with specialized subcontractors ensures high-quality work in unfamiliar domains. Moreover, updating risk transfer methods to match new project types is essential, including securing adequate insurance coverage to mitigate specific risks.

Stay Flexible and Strategically Positioned for Success in 2024

Despite the uncertainties associated with the trends mentioned, construction firms that are prepared and flexible stand to benefit significantly. The U.S. dedication to improving national infrastructure and the expected increase in renovation and rehabilitation projects present substantial opportunities. Thus, through resilience and strategic planning, companies can navigate periods of uncertainty and excel amidst continuous challenges.

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a dedicated surety-bond-only agency with decades of bonding experience, we strive to discover surety solutions for all types of cases, ranging from routine to challenging. Contact us online or call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: www.cpsmi.com

Reviewing Contracts in the Construction Sector

As we conclude the year, it’s crucial for those in the construction industry to conduct a thorough review of their contracts, especially for long-term projects. It’s advisable to revisit your contracts to confirm they accurately represent the current state of the project. Any discrepancies should be addressed and documented immediately, rather than waiting for issues to arise.

Key areas for review include the scope of work, ensuring it aligns with the actual construction being undertaken. This includes verifying details, from fixtures to significant additions like a new wing in a building. Changes discussed in meetings should be formally documented in line with the contract’s terms to avoid future disputes.

Pricing adjustments are also essential. For contractors working on a fixed price basis, it’s vital to include any additional scope in the pricing. Owners should adjust payments accordingly if project elements have been removed. For contracts based on actual costs, the end of the year is a good time to align charges with incurred expenses.

Another critical factor is the project schedule. Both owners and contractors should assess whether the project is on track and address any delays appropriately, including documenting reasons and determining responsibility for any schedule slippage.

Administrative aspects, such as updating the contact person for your company in the contract, should not be overlooked. Contractors should also ensure timely submission of any claims as per contractual deadlines to avoid disputes during litigation.

In summary, instead of considering the contract only at the start, end, or during disputes, it is beneficial for both owners and contractors to proactively review and update their contracts throughout the project’s lifecycle to ensure they reflect the ongoing work accurately.

Construction Bonding Specialists, LLC is a distinct surety bond-only agency with decades of bonding experience. We work to discover bond solutions for all types of bond cases, from standard to challenging. Contact us today to learn how we can help you!

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a dedicated surety-bond-only agency with decades of bonding experience, we strive to discover surety solutions for all types of cases, ranging from routine to challenging. Contact us online or call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: www.cpsmi.com

Construction Industry Tops Ransomware Risk, Says Encryption Software Study

Nordlocker, an encryption software firm, conducted research in 2021 and found that the construction industry faced the highest risk of ransomware attacks among 35 analyzed industries. This risk has increased since then, with Nordlocker reporting in 2023 that the construction sector experienced the most ransomware attacks from January 2022 to January 2023.

The construction industry’s growing reliance on digital technology, particularly computer-aided design (CAD), building information modeling (BIM), and cloud-based collaboration tools, has made it a vulnerable target for cyberattacks. Many organizations in this sector lack adequate cybersecurity plans and have poorly trained employees in identifying and responding to cyber threats.

Ransomware, a malicious attack where data is encrypted and a ransom is demanded for access restoration, poses a significant threat. Paying the ransom doesn’t guarantee data recovery, and the average cost of a ransomware breach is around $4.44 million, damaging a company’s reputation.

Fraudulent wire transfers, phishing scams using social engineering, and compromised emails are prevalent in the construction industry. Cybercriminals impersonate authoritative figures to manipulate financial transactions.

The construction sector is also at risk of intellectual property and data theft, which can lead to significant reputational damage. Protecting sensitive information, such as SSNs, credit card data, and proprietary designs and patents, is crucial to mitigating these cyber threats.

Six Essential Steps to Strengthen Your Construction Service’s Cybersecurity

Privileged Access Management:

Continuously monitor and assess access rights to safeguard your information.

Data Governance and Security:

Categorize data by sensitivity and prioritize the protection of critical data assets.

Regular Secure Backups:

Mitigate potential data and system loss in the event of cyberattacks.

Team Member Education:

Ensure your team is well-informed about industry-specific cyber risks and can recognize and report social engineering attempts.

Enforce Cybersecurity Standards in Contracts:

Reduce third-party risks by requiring external partners to adhere to robust cybersecurity practices.

Implement an Incident Response Plan:

Define immediate actions and strategies to minimize potential losses in the event of a cyberattack.

Boost your cybersecurity defenses today; we’re here to help address your inquiries.  

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a dedicated surety-bond-only agency with decades of bonding experience, we strive to discover surety solutions for all types of cases, ranging from routine to challenging. Contact us online or call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: www.cpsmi.com

Understanding Mortgage Broker Bonds

Image of a house with percentages next to it to represent the Mortgage Broker industry.

For many aspiring mortgage brokers and seasoned industry professionals alike, the term “Mortgage Broker Bond” can seem like a puzzling requirement on the road to doing business legally. However, understanding what a Mortgage Broker Bond is and its significance is crucial in the world of mortgage lending. In this blog article, we’ll break down the fundamentals of Mortgage Broker Bonds, why they matter, and how they benefit both professionals and consumers.

What is a Mortgage Broker Bond?

A Mortgage Broker Bond, also known as a Mortgage Loan Originator Bond, is a type of surety bond that serves as a protective measure within the mortgage lending industry. It’s a financial guarantee required by regulatory authorities in many states to ensure that mortgage brokers and loan originators conduct their business ethically and in compliance with state and federal laws.

Why Are Mortgage Broker Bonds Required?

Mortgage Broker Bonds are required for several reasons:

Consumer Protection:

These bonds are primarily designed to safeguard consumers from immoral practices. They provide financial protection if a mortgage broker engages in fraudulent activities, misrepresentation, or unethical lending practices.

Legal Compliance:

Regulatory authorities mandate Mortgage Broker Bonds to ensure that professionals in the mortgage industry adhere to state and federal regulations governing mortgage lending. This helps maintain the integrity of the industry and fosters responsible lending.

Ethical Compliance:

Bonds incentivize ethical behavior among mortgage brokers and loan originators. Knowing they are financially liable for misconduct encourages professionals to maintain high ethical standards.

Financial Compensation:

If a consumer or another party suffers financial losses due to the actions of a bonded mortgage broker, they can file a claim against the bond. If the claim is validated, the surety company steps in to provide compensation up to the bond’s coverage limit.

How Mortgage Broker Bonds Work

Understanding how Mortgage Broker Bonds operate is essential:

Three Parties Involved:

A Mortgage Broker Bond is a contractual agreement between three parties:

  1. Principal: The mortgage broker or loan originator who is required to obtain the bond.
  2. Obligee: The regulatory authority or government agency that mandates the bond.
  3. Surety: The surety company that issues the bond and provides the financial guarantee.

Financial Guarantee:

The bond serves as a financial guarantee that the bonded mortgage broker will adhere to all applicable laws and ethical standards in their lending activities.

Consumer Protection:

If a consumer or another party believes a bonded broker’s actions have harmed them, they can file a claim with the surety company. If the claim is valid, the surety company compensates the harmed party up to the bond’s coverage limit.

Compliance and Renewal:

Mortgage Broker Bonds require annual renewal to ensure ongoing compliance with state and federal regulations.

Mortgage Broker Bonds are a vital component of responsible mortgage lending. They protect consumers, promote ethical conduct, and ensure legal compliance within the industry. By understanding the role of Mortgage Broker Bonds, professionals in the mortgage lending field can operate with integrity and confidence, providing a safer and more secure environment for borrowers and lenders alike.

Seeking to obtain a Mortgage Broker Bond, apply here. Construction Bonding Specialists offer a wide range of surety bonds. Contact us today for expert assistance!

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a dedicated surety-bond-only agency with decades of bonding experience, we strive to discover surety solutions for all types of cases, ranging from routine to challenging. Contact us online or call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: www.cpsmi.com

Small Bond Applications for Contractors

In the world of construction, bonding plays a crucial role. For many contractors, obtaining a bond isn’t just a mark of credibility, but also a legal necessity for many projects, especially government ones. For those who are unfamiliar or just starting, understanding the smaller nuances of bonds can be daunting. One of the initial steps towards bonding is the small bond application, an essential tool for contractors just breaking into larger projects.

What is a Contractor Bond?

A contractor bond, also known as a construction bond, is a type of surety bond. It ensures that the contractor will adhere to the specified terms of the contract. If the contractor fails to fulfill the contract’s requirements, the bond can compensate the project owner financially.

Why Consider a Small Bond Application?

For emerging contractors, a small bond application is a stepping stone. Here’s why:

  • Builds Credibility: Even if it’s a small bond, having one demonstrates your commitment and builds trust with potential clients.
  • Legal Requirements: Some smaller projects or municipalities might still require bonds, even for less extensive contracts.
  • Gateway to Larger Bonds: Successfully holding and honoring a small bond can make it easier to qualify for larger bonds in the future.

The Small Bonding Application Process

Though the specifics can vary based on the bonding company, the general process often involves:

  • Personal and Business Financial Statements: These offer insight into your financial health, assuring the bond issuer of your credibility.
  • Work Experience and Project Details: This includes the nature of the projects you’ve handled, duration, cost, and other specifics.
  • Credit Score Check: A good credit score can improve your chances of approval.
  • Professional References: These can vouch for your work ethic, reliability, and professionalism.

Tips for a Smooth Bond Application

  • Ensure All Documents are in Order: Double-check to see if all required documents are present and filled out accurately.
  • Seek Assistance: Seek help from a professional who is experienced in the process.
  • Maintain Good Credit: Regularly check your credit report for any discrepancies and maintain a healthy financial practice to keep your score up.

A small bond application may seem like just another formality in the vast construction industry. However, for budding contractors, it represents growth, potential, and a commitment to excellence. If you’re a contractor on the fence about applying, remember: every big journey starts with a single step, and in the world of construction, this might be yours.

Need a SMALL BOND or a BIG BOND? We offer a variety of surety bonds – and BONDS are all we do!

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/

Construction Bonds for Contractors

Most construction projects require contractors to provide bonds, which protect the owner against non-payment, lack of performance, shuttered business, or warranty issues. Also known as contract bonds, construction bonds guarantee the bondholder will fulfill the contract terms.

Contractors generally purchase construction bonds to protect project owners from monetary loss. If an issue arises, the owner can file a claim with the surety company, which will intervene to guarantee the contract is fulfilled. After the bond claim is settled, the surety will recapture all expenses from the contractor who purchased the bond, according to the terms set by their agreement. 

Main Parties Involved in Construction Bonds:  

Principal
The person or company purchasing the bond, typically the general contractor or subcontractor. 

Surety
The company that provides the bond for the project, is generally responsible for arranging the completion of the contract if the contractor fails.

Obligee
The party protected by the bond, usually the property owner, public agency, or other party. 

Most contractors need a bond because they are used on construction projects whenever the owner needs additional monetary protection during a project. Construction contracts can provide a decent level of protection, but a breach of contract can be expensive, time-consuming, and often requires court.

Securing a construction bond should be done with a reputable surety broker, who will advise you on the best way to submit your program requirements to a surety company.  Surety brokers will also make sure you receive the best terms and conditions. 

If work does not get completed, the contractor defaults, or payments are not being made accordingly, a claim against the bond can be filed. After a claim is made, the company will investigate, and the principal will be contacted to verify facts and amounts. 

To settle a bond claim, the surety might hire a new general contractor to finish the job, pay the obligee for damages sustained, or issue a payment to a subcontractor who wasn’t paid according to the contract.

We have decades of surety bonding experience, from simple to complex; contact us to learn how we can assist you. 

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

Electronic Surety Bonds

The establishment of electronic surety bonds is owed to the National Multistate Licensing System and Registry (NMLS), an organization that simplifies the process of obtaining and validating professional credentials, such as licenses, across different states. The creation and prevalence of electronic surety bonds are primarily due to NMLS’s advocacy for their adoption and their provision of secure technology to facilitate a smooth electronic filing process.

Before the advent of electronic surety bonds, bond processes were entirely paper-based, with inherent disadvantages. With the swift advancements in information technology at the onset of the 21st century, most industries, including those managing financial, legal, or other confidential data, began shifting toward digital systems. It was apparent that the bonding process could be more efficient. This prompted the NMLS to step forward and steer the revolution. And so, the digital transformation of surety bonds came into existence. Today, electronic surety bonds are rapidly gaining popularity and are on the verge of becoming the primary, if not the only, choice!

Advantages of Electronic Surety Bonds

The merits of electronic surety bonds are best appreciated when contrasting them with the drawbacks of traditional paper-based bonds. Paper bonds often took longer to process, were more challenging to initiate, and had a higher probability of errors. For those who needed bonds quickly, the process could be unnecessarily lengthy or prone to unexpected interruptions due to these paper-based systems.

The introduction of electronic bonds dramatically improves these issues, ensuring the bonding process is highly efficient, with many bonds being issued within 24 hours. The digital nature of this process also reduces the operational costs for bond providers, savings that are often passed down to those seeking bonds. Furthermore, the application for electronic bonds can be initiated instantaneously, eliminating the need to wait for physical paperwork to arrive. Thus, most individuals find electronic surety bonds superior in almost every aspect.

How and Where to Submit an Electronic Surety Bond?

Initially, when electronic surety bonds were launched in 2016, it was up to individual states to decide whether they would recognize these bonds submitted digitally. Only a handful of states agreed to do so in the beginning. However, as the program demonstrated its effectiveness, more states began to accept this new format. By the beginning of 2022, 43 states had consented to acknowledge electronic surety bonds. The states that have yet to adopt this process include:

  • Maine
  • New York
  • Pennsylvania
  • Alabama
  • Florida
  • New Mexico
  • Arizona

What is the Process for Submitting a Surety Bond Electronically?

The process for electronic filing may differ based on the type of bond, the issuing entity, and the bond amount. Generally, the individual seeking the bond is required to submit specific fundamental details via an online platform:

  • A completed bond application.
  • Consent to conduct a credit check.
  • Supplementary documentation (for instance, a financial statement or a copy of the bond requirements).

The surety agency that facilitates the connection between the bond seeker and the bond provider oversees the specifics to ensure that the electronic submission is conducted appropriately and complies with all relevant regulations. Many opt to utilize digital platforms such as DocuSign, which enable formal signing and document exchange between parties.

Fast track applications, we have the surety bond you are looking for, including online rapid bonds for jobs under 400,000!

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

Finding Contractors for Subcontracts

Relationships are vital in the commercial construction industry, specifically between general and trade contractors. While general contractors subcontract work to a variety of subcontractors, trade contractors focus mainly on projects given to them by general contractors, making this dynamic for both sides mutually advantageous.

The partnership between subcontractors and general contractors can be complex. General contractors typically require subcontractors to get prequalified before performing any work or being invited to submit bids on jobs. Subcontractors usually need to provide information to the general contractors, including safety records, finances, bonding capabilities, litigation history, insurance coverage, relevant work history, experience, and more. Trade contractors also perform their own vetting process to determine goals and ensure they are able to work with a reputable general contractor.  

In both cases, information should be funneled to owners during pre-qualification or when securing the contract. All plan changes or specs should also be reviewed so extra work doesn’t add up down the road. 

Clauses are generally what to look out for in contracts. Here are some examples:

Pay-when-Paid and Pay-if-Paid
These two main contract provisions should be analyzed intensely before any signature. Pay-when-paid contracts require the general contractor to pay the trade contractor when the owner pays them. Pay-if-paid requirements outline subcontractor payment if the general contractor gets paid. If they do not receive compensation, neither does the subcontractor. 

Flow-down and Pass-through
While incorporating the terms of the general contract with the owner into the subcontract, the subcontractor assumes the same duties toward the general contractor as they would to the owner. Prime contracts should be reviewed if these clauses are on the table since they can help specify whether there are terms that should be avoided. 

Change Orders
All work should be submitted in writing, and jobs should never be completed without an agreement from the owner. There should be a designated change order authorized person as well. 

Indemnification Clauses
General contractors who are negligent will be disciplined accordingly due to this clause. For subcontractors, their indemnification should only require them to assume liability for their own carelessness. 

Payment Bonds
General contractors are almost always required to post a payment bond to protect the owner, while private owners are also increasingly requiring them. If established, these bonds help to avoid liens filed against their property. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

Government Construction Contracts

Construction firms highly covet commercial government contracts, as public spending on construction projects exceeds hundreds of billions of dollars yearly, making them a lucrative opportunity. While most construction firms rely on government contracts as their sole source of revenue, others bid on various public and private jobs.

Public construction contracts are governed by lengthy laws, which vary based on the agency. However, there are some consistencies between requirements that all agencies abide by. Read on to learn more about bidding on government construction contracts. 

Construction Bonds
Contractors often need to guarantee bids, construction work, and payments to subcontractors or suppliers by government agencies. Moreover, the terms of the bid should be obeyed. Typically, three parties are involved: the obligee, the principal, and the surety. The three most common types of bonds required on construction projects are bid, performance, and payment. 

Pre-Bid Site Visit
To allow contractors to better understand the project at hand, owners will often allow site visits. Often, contractors can ask questions regarding the bid or network with relevant contractors. Sometimes, these meetings are mandatory, and failing to attend will result in bidding ineligibility.

Competitive Bidding
Budgets are top-of-mind for most public construction projects, and most often, contractors can bid on projects after an architect completes the full plans. Prior to the bid date, projects must be advertised in one way or another. The lowest responsive, responsible, and eligible bidder will be given the job. 

Special Programs
Women, minorities, and small-business owners should have an equal opportunity to bid on projects, so a number of state, local, and federal agencies have created programs to ensure they are awarded accordingly.

Davis-Bacon Act of 1931
This federal law forces contractors to be paid local wages based on earnings paid to the various classes of laborers working on other local construction projects. Varying from state to state, wages will differ based on location. 

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/