Payment Bonds / Performance Bonds

[teamtree]

Anyone know what these are and how you get them?

I have a general idea but never had to provide one for a job before.

 

[BC WetCoast]

A performance bond in essence a guarantee to your customer that the job will be completed, whether you are around or not. An analogy would be a bail bond.
You buy the bond and name your customer and the project specifics (price and work). If you fail to complete the project, the customer would then go to the bond holder to get the project completed. How the bondholder does this can vary, ie they get another contractor or they put pressure on you.

I've only dealt with this from the customer side, and have never had to enforce a bond so I'm not positive on all the details. But I'm pretty sure if the bondholder has to pony up to complete a project, they're coming after you for $$$.

There are lots of companies that provide them. Your best bet would be to talk to your bank and your insurance agent for references.

Here is a link to standardized bidding procedures for BC construction projects. Clause 8 talks about Performance Bonds.
http://www.pccbc.com/forms/Std_Doc_and_Guideline_June_25_2004.pdf

I'm not sure what a payment bond is, but when I was in construction management, we required the contractor to provide a Statutory Declaration, which he stated on oath that all his subs, materials and worker's comp were paid. Then we would provide progress payments.

Hope this helps.

 

[treemandan]

Some idiot called me to look a this 1 jap maple that was growing into her house. After our meeting I wrote up a proposal and she seemed Ok but wanted to talk to her husband.
She then leaves a stuttering and long message for me about how she wanted to know if I was insured and bonded. I gave her the ins info but told her I didn't think a bond was appropriate, it ain't, unless its a BIG job at a BIG place. Like an airport or state bldg. or something like that. This was a 300 dollar prune job at a house.
She got all worried and started acting like a loon, it bothered me and I told her so. The tree was mangled by the suck asses who sucked her ass.
If the job warrants a bond, you will know but know this- You don't need no stinking bond. If they must have it they are really gonna pay.

 

[treemandan]

A performance bond in essence a guarantee to your customer that the job will be completed, whether you are around or not. An analogy would be a bail bond.
You buy the bond and name your customer and the project specifics (price and work). If you fail to complete the project, the customer would then go to the bond holder to get the project completed. How the bondholder does this can vary, ie they get another contractor or they put pressure on you.

I've only dealt with this from the customer side, and have never had to enforce a bond so I'm not positive on all the details. But I'm pretty sure if the bondholder has to pony up to complete a project, they're coming after you for $$$.

There are lots of companies that provide them. Your best bet would be to talk to your bank and your insurance agent for references.

Here is a link to standardized bidding procedures for BC construction projects. Clause 8 talks about Performance Bonds.
http://www.pccbc.com/forms/Std_Doc_and_Guideline_June_25_2004.pdf

I'm not sure what a payment bond is, but when I was in construction management, we required the contractor to provide a Statutory Declaration, which he stated on oath that all his subs, materials and worker's comp were paid. Then we would provide progress payments.

Hope this helps.

Thanks for the info buddy, I was curious about how to get one but I never will plan on it. I am just an itity bity residential tree guy with no hopes or aspirations of hitting the mother lode. I can easily see how some of the bigger outfits would need a bond. I just tell em " pay me when I am done" if that ain't good enough...

 

[BC WetCoast]

Some idiot called me to look a this 1 jap maple that was growing into her house. After our meeting I wrote up a proposal and she seemed Ok but wanted to talk to her husband.
She then leaves a stuttering and long message for me about how she wanted to know if I was insured and bonded. I gave her the ins info but told her I didn't think a bond was appropriate, it ain't, unless its a BIG job at a BIG place. Like an airport or state bldg. or something like that. This was a 300 dollar prune job at a house.
She got all worried and started acting like a loon, it bothered me and I told her so. The tree was mangled by the suck asses who sucked her ass.
If the job warrants a bond, you will know but know this- You don't need no stinking bond. If they must have it they are really gonna pay.

The cost of the bond will double (or more) the cost of the job. If you can find someone who will give you a bond on a $300 job.

As an aside, it is good to research this topic and find out the details (who sell them, how much, what are the default ramifications) for when you get a massive job ($30,000) that requires a bond.

 

[treemandan]

The cost of the bond will double (or more) the cost of the job. If you can find someone who will give you a bond on a $300 job.

As an aside, it is good to research this topic and find out the details (who sell them, how much, what are the default ramifications) for when you get a massive job ($30,000) that requires a bond.

That is pretty much what I told the lady.

 

[2FatGuys]

The cost of the bond will double (or more) the cost of the job. If you can find someone who will give you a bond on a $300 job.

As an aside, it is good to research this topic and find out the details (who sell them, how much, what are the default ramifications) for when you get a massive job ($30,000) that requires a bond.

The cost of a performance bond does NOT double the cost of a job unless you have a bad track record of incompletions and poor work. Like insurance, you are rated on your history, and the bonds are priced accordingly.

A payment bond is only applicable if you are subcontracting portions of the work to other entities. For example, some tree companies subcontract their climbing or stump grinding. On larger jobs, specifically government jobs in this jurisdiction, subcontractors are to be listed on a specific affidavit and a payment bond secured to insure their timely payment, in order to prevent liens against the property owner. Again, the cost of this bond is in direct relationship to the risk you pose to the insurance carrier.

 

[DDM]

1/2 the people out there will ask if you are bonded and insured.None of the people I have ever quizzed about the bonded part even knew what a bond was or how it works.Now people that lets say for instance like contract cleaners/janitors that work inside buildings while none of the employees are around and have a key to the building ect.These people do carry bonds which if you have a clean criminal record are very cheap.These are the bonded that 99%
of residential customers have heard the phrase and are now repeating.When I have explained to them what a surety bond is 100% decided that bonding wasnt necessary as long as I was insured.

 

[teamtree]

Thanks for the input guys.

I have talked with my insurer and have started the paperwork to get the required bonds. This will be a good education for us.

 

[Toddppm]

Exactly right DDM, I have to explain that to people all the time because a bunch of the hacks around here advertise that they are bonded and insured. Bonded against what? Just another scare tactic they use I guess but people eat it up.

 

[treemandan]

Exactly right DDM, I have to explain that to people all the time because a bunch of the hacks around here advertise that they are bonded and insured. Bonded against what? Just another scare tactic they use I guess but people eat it up.

I hear the mandibular activity right now and sometimes people want to throw a curve but that is when I tell them to slow down. " If I was interested in bond work , maam, I would NOT be here talking to your petty tushy" Is what I say.

 

[treemandan]

Exactly right DDM, I have to explain that to people all the time because a bunch of the hacks around here advertise that they are bonded and insured. Bonded against what? Just another scare tactic they use I guess but people eat it up.

Bonded, does topping and has the corecct papers to be out on work release?

 

[M.D. Vaden]

Didn't this question come up elsewhere too?

Let's see a few examples provided of some hypothetical problems, and how the bond actually applies to the problem.

Not your problems, just an example of what is expected, how it would go wrong, and how the bond helps with the problem.

 

[treemandan]

Didn't this question come up elsewhere too?

Let's see a few examples provided of some hypothetical problems, and how the bond actually applies to the problem.

Not your problems, just an example of what is expected, how it would go wrong, and how the bond helps with the problem.

I was interested but it seems a bond is just a deeper security measure case specfic to the needs of the client. My client is Mrs. Anderson, I see her shopping.
It is a mysterious thing but it is simple to understand. Do you thing contractors working on space shuttles are bonded? Maybe logging? Mining?

 

[Texas Traveler]

I have been bonded a lot hauling government freight, going in arsenals, bases & warehouses all over the country. But it's just a normal way of doing business.

But the cities are requiring it alot on small contractors doing small jobs for them.
For one reason there has been alot of contract defaults with small companies.
I sold a small radio system to one on credit one time & had a heck of time collecting the payments.
I talked to a city inspector about the company later on & he was not impressed with their work.
I later lost a good friend because I would not back his bond for city concrete work here in Dallas.
I wanted my retirement funds put to better & safer use.

 

[DDM]

I have been bonded a lot hauling government freight, going in arsenals, bases & warehouses all over the country. But it's just a normal way of doing business.

But the cities are requiring it alot on small contractors doing small jobs for them.
For one reason there has been alot of contract defaults with small companies.

Exactly Most city/government work requires bonding.Joe blow homeowner has just heard the term somewhere and thinks a bond is customary.He actually has no clue to even ask for proof of GL or WC.I have been asked 100's of times if I had insurance maybe out of 100 only 7 of them actually wanted to see proof.
IMO this is where the homeowner needs education.

 

[M.D. Vaden]

Regarding tree work locally, much involves no down payment and few handle goods and materials,

Seems that most arborists bonds are more of a credential than a tool during many workdays.

 

[BillC]

Where I live each county you operate in requires a seperate business license (and 300-500 fee every two years) as well as a bond of 30,000. They lump tree contractors into a home improvement contractor status like a framer or roofer. Just another tax/forced payment. I purchased my bond from my insurance agent and it was relatively cheap. It is based on my assets, credit score and experience.

 

[DDM]

Where I live each county you operate in requires a seperate business license (and 300-500 fee every two years) as well as a bond of 30,000. They lump tree contractors into a home improvement contractor status like a framer or roofer. Just another tax/forced payment. I purchased my bond from my insurance agent and it was relatively cheap. It is based on my assets, credit score and experience.

They dont require such a bond in SC.

 

[DDM]

Where I live each county you operate in requires a seperate business license (and 300-500 fee every two years) as well as a bond of 30,000. They lump tree contractors into a home improvement contractor status like a framer or roofer. Just another tax/forced payment. I purchased my bond from my insurance agent and it was relatively cheap. It is based on my assets, credit score and experience.

They dont require such a bond in SC.