Last year, I realized that a few of our employees did not have the best intentions when they came to work. It seemed like their goal was to slack off and avoid work, and it was really frustrating. I realized that I had to do something in order to make things right, so I started working with them to train them. I also installed a camera system and explained the consequences of their actions. Within about six months, we were able to completely overhaul things, and it made a huge difference. This blog is all about keeping employees productive and on track, so that you can keep your company viable.
If you are in the process of starting your own construction company, you need to become familiar with how surety bonds through places like NFP, P & C, Inc. work. Surety bonds are commonly used in the construction industry, especially if you want to secure government contracts or work with large businesses or organizations. Here are a few things that you need to understand about surety bonds as a new construction business owner.
#1 How Surety Bonds Are Used In The Construction Industry
Within the construction industry, surety bonds are usually taken out in order to guarantee that the contractor who is working on a job will complete the job as it is detailed in the contract signed between the contractors and the individual who hired them to carry out the job.
The surety bond is an assurance that the work in the contract with get completed. If the contractor for any reason does not complete the work and fulfill their contractual duty, the surety bond will be used to hire someone else to complete the work and the money within the bond will be used to cover any penalties, fees, or damages that arise from the breach in contract.
#2 Parties Involved In A Surety Bond
There are generally three different parties involved in a construction surety bond process. The first party involved is the principle. The principle is the individual who applies for the bond and who purchases the bond. If you run your own construction business, the principle would be you.
The second party involved is the oblige. The oblige is the government organization, business or company that asked you to purchase a surety bond and that you are doing the construction work for.
The third party involved is the surety. The surety is the organization that is backing up the bond that you purchased. The surety is generally a financial organization. With the bond you purchased, they are guarantee to the oblige that you, the principle, will complete your work. If you don't complete your work, the surety will ensure that you, the principle, pays to have the work completed by another party for the oblige.
#3 How Surety Bond Works
Basically, in order to secure a surety bond, you have to fill out an application with a financial organization. If your application is approved, you will pay the surety bond by paying a percentage of the overall cost of the bond to the surety, which is known as a premium. The surety will then extend you credit. That credit is in place to ensure your oblige that you will complete the work and that if you don't complete the work yourself, a different contractor will finish the work at no additional cost to the oblige.
If you finish the job on time and within the terms of your contract, you will only have to pay the premium on the bond. However, if you don't finish the work, your oblige can file a claim with the surety company; if the claim is accepted, the surety company will pay for the work to be completed and you will have to pay the remained of the bond sum to cover the cost of the work.