construction project

Bid Bond Pricing

Contractors who want to bid to work on a project can expect to be asked for a bid bond. A bid bond is a way to guarantee that the bidder or contractor will push through with the work for the price he has already stated. These are important means of security for the developer against a contractor just backing out or even increasing the cost after the project has been awarded. Such risk management tools are necessary especially when the construction project is large, like a commercial development.

There are three players involved in a bid bond. The first is the principal or the contractor who is the one to buy the bid bond along with submitting the bid for the project. The obligee, on the other hand, is the developer who is asking for the bond. Lastly, the surety is the bank or underwriter who issues the bond, guaranteeing the principal’s capability to push through with the work for the bid amount if the contract is awarded to them.

In the past, some contractors have tried submitting lower bids than others just to win the project and then either fail to complete it or raise the price immediately after the contract has been awarded to them. A bid bond then shows the developer that the contractor can submit a performance bond if they win the contract. It also indicates that the bids are all serious. And should the contractor back out or fail to finish the project, the developer can get back the bond equivalent to the price difference between the lowest and the second lowest bid.

The bid bond cost itself is not high, with prices ranging from free to about $350. However, the bond has to cover a specific percentage of the estimated amount of the contract, normally at 5 to 10%. This means if you are bidding on a project with an estimated cost of $250,000 and the bid bond has to be 10%, then the bond amount has to cover $25,000.

 Contractors only lose the amount of their bid bond in certain circumstances. If they withdraw the bid before the bidding process is actually opened, then they will get this bond back. However, if they do back out after the contract has been awarded to them, then they will lose it. So long as the bidding has not ended and the contract has not been given to the contractor, they are able to receive this money again.

Because of the big amount of coverage required in a bid bond, especially for huge construction projects, underwriters or banks require specific paperwork for contractors applying for a bid bond. For smaller projects, they only need the bid amount, the date of the bid, any previous bids, the company’s history and personal credit score.

For bigger projects, usually more than $250k or $350k, depending on the bank or the underwriter, more documents are required. While the smaller projects only require the contractor’s personal credit score, bigger bid bonds will require the construction company to submit their financial records and proof of their experience in the construction industry. These are required for the issuer of the bid bond to see if the company is capable of handling a much bigger project. After all, the point is to minimize the risk of contractors backing out or failing to finish the project.

If the project is for a commercial development and a deeper review of the contractor’s financial and technical capabilities are in question, then the support of a CPA might be helpful. Such a professional can help the contractor prepare his bid, including all the job costs like materials, subcontractors, labor, overhead and their profit. When projects are bigger, there are a lot more cost items to add up and the risk of submitting a very low bid becomes higher. To eliminate this, a construction bid software might also be of great help in estimating the cost of the contract as accurately as possible to eliminate the risk of very low bids that will be unprofitable for the contractor.

In most construction projects, many issues and even delays can be expected, especially when the project is much bigger. Developers simply want to lessen their headaches and only employ contractors that are serious and capable of seeing the project through. This is the important role bid bonds play in protecting every party.

buildingListening to people talk, you will be tempted to think that building a building from scratch is an easy affair. This s not something to scare you though, it can be done with the best preparations on the ground. Experts say that they determine the success of a project by looking at the preparation work that has been done on the ground. You can actually do more than half of the work on the ground and the next phase will be very easy to tackle. Read through this article and get a feel of how it is like to prepare for a construction project.

Ground viewing

Before you can start planning for a building project, visit the site and see how the terrain is like. When you visit the site you will be in a better position to apportion funds for the preliminary works. Some areas need more work than others depending on the terrain and the type of soil. Make sure you visit and do the actual measurements of the site before you start on ground work. Make sure you have enough space for your project and ensure the area is accessible from the main road.

Excavation

After viewing the site and giving it a go ahead for the construction, the real work needs to start. You can start by clearing the bushes or demolishing any structure that are on the piece of land. This is the first preparation that you will do. Depending on the soil type and the ground, you will do some excavation. Make sure you do it in a good way and take care of the neighboring property. Get the foundation done and make sure it is firm as this is what will hold your building for the days to come.

Materials

The materials you will use during the construction ought to be at the site before the main construction starts. Get an area to store them as you continue working. Most concrete contractors Birmingham construct temporary stores to keep the valuable materials on the site and it is good to give them an opportunity to do that. Source the materials early enough and keep them ready for the real job.

Tools and equipment

If you are doing the project by yourself, you will need to hire some tools and equipments that will come in handy as you handle the project. Get a list of all the tools and equipment that you will need. Visit different stores and ask for their hiring charges and duration. This will give you a clear picture of what you will spend on them.

After going through these preparations, you are ready to start working on the project. This is as easy as it has been said. With the tips above, anybody can be a construction consultant at their own place. Keep reading for more information and different experiences from different people. All the best!

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Every time you consider setting up a building or going through a construction project, it is wise to consider the cost of the project before you start on the real job. Doing this will give you an opportunity to plan and execute you plans in a good order. It will also give you an opportunity to start your project and work on it to completion without stopping. When you stop your project midway, many things change like the cost of the material, the labor charges which can make your project expensive than you thought. This article has listed down some of the costs that you need to consider before starting off on a project.

Cost of material

The first consideration that you should make is the cost of the raw materials that you will be using on your project. You will need many items for your project including, the ballast, cement and sand among other materials to be used by the electrician and the plumber. All these materials are found in different stores and it s your duty to move around shopping for the best quality at the best price possible. By the end of the day you will have saved a good amount that will be used in another area.

Contractor’s charge

Another major fee that you are going to pay is the contractor fee. As much as you would like to get the cheapest contractor around, it is important to consider the quality of work that he or she will deliver. It can be very sad to have all your materials wasted by a contractor who has little or no experience. When choosing the concrete contractors Nashville, it is important to look at their reputation over the years. You can consider young companies that have demonstrated that they are responsible and they can manage on their own. This will cut down your total cost since such companies charge a lesser amount.

Legal fees

There are legal fees and approval fees also known as stamp duties in some states that ought to be paid to have the plans approved. It advisable to pay all the legal fees that the state demands. This will give you a peace of mind as you continue working on your project else you will have to deal with the municipal from time to time derailing your project.

Other miscellaneous costs

There are other costs that are rarely considered and it is important to consider them. You can experience challenges like weather conditions that can push the labor costs up by making the work move at a slower rate. It is always good to make an allowance for such situations or other emergencies or a forgotten fee.

With the fees and costs listed above, you have the major part of your construction project covered. Plan your money wisely and make a major breakthrough in your next project.