New entrants into the construction industry quickly find that Surety bonds in Pennsylvania are essential in order to do business. Often, a client will specify the bond requirements, and the construction firm need do nothing more but comply. However, construction owners can protect their budgets by learning about surety bonds and how they function.
What Happens Without a Bond?
The smooth and timely execution of a construction project is generally related to the expertise of the construction firm. However, keeping schedules can be challenging. Construction firms must balance the use of available resources with anticipated delays. If a construction company schedules work down to the last minute, then a delay in supply delivery, adverse weather, or any other problem will essentially guarantee a completion delay.
Many clients accept contractor delays as part of the business. However, some clients cannot afford to have such a carefree attitude. Construction delays can mean significant business losses in the form of lost revenue. This can not only hurt the company’s profitability, but affect their reputation with their financial backers as well.
Bonds Align Client and Construction Firm Goals
With surety bonds in Pennsylvania, construction delays fall back onto the construction firm, and relieve the risk to the client. Construction firms pay annual premiums to a surety, usually an insurance provider, to protect their clients. In this way, if a construction firm is faced with the need to delay a schedule, they will bear the associated business costs. The surety bonds demonstrate their faith in their own capabilities.