Watching the clock
Make sure performance bonds have time limitations
A contractor's ability to obtain performance and payment bonds often is an important factor in obtaining jobs and expanding business opportunities. Your ability to obtain bonding distinguishes your company from others and immediately informs potential customers you are an established contractor with a proven record of success and financial strength.
Bonding is essential to be able to contract directly with government agencies, and many private construction projects require construction bonds. Pursuant to a federal statute known as the Miller Act, contractors who contract with a federal government agency are required to provide performance and payment bonds if their government contracts exceed $100,000.
Similarly, per state laws commonly referred to as Little Miller Acts, contractors who enter into public construction contracts with state agencies or local governments, school boards and political subdivisions exceeding a certain dollar amount set by state statutes also are required to provide performance and payment bonds.
Obtaining bonds qualifies contractors to perform public work and satisfies the requirements of private parties who require contractors to provide performance and payment bonds; however, construction contractors face greater liability exposure as a result of providing bonds, including potential personal liability exposure, for every job for which a bond is issued.
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