Ask the Engineer: To Bond, or Not to Bond?


To Bond, or Not to Bond?

Bonds can help protect owners if a contractor can't complete a project..

Financial risk is always associated with construction projects, which often involve significant investment and a high level of coordination of several parties for successful completion. As a measure of financial protection, property owners can purchase performance bonds and labor and materials payment bonds.

A performance bond is a third-party agreement involving the contractor, the owner, and the bonding company that guarantees the completion of a construction project. If the contractor becomes financially distressed or insolvent and is unable or unwilling to complete the project, a bonding company can step in and get the project completed as specified.

In RAND's latest Ask the Engineer column, we discuss when bonding is recommended and what type of bond to purchase, including:

  • The difference between performance bonds and labor and materials payment bonds
  • How much bonds cost
  • The downside of bonding
  • The importance of retainage
  • Why a bond is not the same as insurance
  • When bonding is probably not necessary

For more on bonding, read the full article on our website. If you have questions or comments, a repair or upgrade question about your building, or a topic you would like more information on, send your queries to Ask the Engineer at info@nullrandpc.com. We look forward to hearing from you!


Stephen Varone, AIA is president of RAND Engineering & Architecture, DPC

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