13 Bonds and Guarantees

Question 1

What is a bond?

Answer 1

???

Question 2

Where would a contractor obtain a performance bond?

Answer 2

???

Question 3

What is the difference between ‘on-demand’ bonds and ‘conditional’ bonds?

Answer 3

???

Question 4

Name some different types of bond.

Answer 4

1. Performance Bond
2. Advance Payment Bond
3. Retention Bond
4. Off-Site Materials Bond
5. Defects Liability Bond

Question 5

Under what circumstances would you recommend the use of a performance bond to a client?

Answer 5

???

Question 6

In your experience, what level of cover is generally taken out in a performance bond?

Answer 6

???

Question 7

What does the price included by a contractor for a performance bond in its tender tell you about the contractor?

Answer 7

???

Question 8

Should there be any link between a performance bond and any warranties taken out on a project?

Answer 8

???

Question 9

What are advanced payment bonds and how are they used?

Answer 9

???

Question 10

What are retention bonds and how are they used?

Answer 10

???

Question 11

What are off-site materials bonds and how are they used?

Answer 11

???

Question 12

What are defects liability bonds and how are they used?

Answer 12

???

Question 13

What is a PCG and how is it different from a performance bond?

Answer 13

???

Question 14

If your client had the choice of using a parent company guarantee or a performance bond, what would you recommend?

Answer 14

???

Question 15

When using a PCG, how would you establish the financial stability of the parent company?

Answer 15

???

Question 16

A contractor on one of your projects has become insolvent. How will your client go about claiming the money from the performance bond?

Answer 16

???

Question 17

A contractor on one of your projects has become insolvent. How will your client go about completing the project using the parent company guarantee?

Answer 17

???