# Bonds bonds bonds



## mattg2448 (Jan 26, 2015)

Alright, so, not sure if this is the right area but it's for excavating so I'm hoping so. 

So today was my first day laid off, I thought, let's go run some errands and maybe try finding work for the business.. so meet up with a friend and he introduces me to the drain commissioner. The guy some how knew me and gave his engineer and 2 miles of seperate jobs to bid.. I got all excited just to read the bid sheet and to see bonds required.. 

So.. where do I even start? I'm assuming I need 3 bonds, a bid bond, performance bond and a payment bond? Also, where in the world do I get one? How much do they normally cost? Is it better to have one now in my first year? 

I don't even own equipment, but I must be insured, bonded, miosha certified, ect, am I looking at this the right way? Or do I pass on the job and wait to be bigger to get bonded. 

Oh ya, these bids are small, like 4k each.. worth it??


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## griz (Nov 26, 2009)

Go to your insurance carrier for a bond.

A bond for 4K????

Never heard of such a thing....

You may be able to bond for that much....:whistling


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## 91782 (Sep 6, 2012)

mattg2448 said:


> Alright, so, not sure if this is the right area but it's for excavating so I'm hoping so.
> 
> So today was my first day laid off, I thought, let's go run some errands and maybe try finding work for the business.. so meet up with a friend and he introduces me to the drain commissioner. The guy some how knew me and gave his engineer and 2 miles of seperate jobs to bid.. I got all excited just to read the bid sheet and to see bonds required..
> 
> ...


Now you know why so many Italians are in the dirt moving biz (Dan's Excavating, Angelo's).:whistling

Bonding is not "optional".


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## Moxley-Kidwell (Jan 28, 2011)

Talk to your insurance company, but if you don't have assets/cash or some money flow it may be tough. I'm with griz, bond on 4k is just dumb usually the bonds around me don't start until you get to at least 100k in work. There are businesses that just do bonding also though. Everyone will most likely want a financial statement, a list of work on hand, work history and more.

Just a quick tutorial of my pretty limited knowledge. We have bonding in place up to 1 mil pretty easy, but not real sure how much more I could get. I have yet to even use it because we've stayed busy in the private sector.

To bid public work you need a bid bond to submit with the bid. It shows that someone will give you a bond. The bonding company will most likely charge you a small percentage of the total price of the job you are bidding maybe even up to 1%. 

If you are awarded the job you would have to post the performance & payment bond this is one bond. You post this to ensure that if you don't perform the work or don't pay the subcontractors or material men the bond company will have to. You will usually have x amount of days to post the bond. The company will charge you again a percentage for the bond, but a higher one probably 1-4% depending on how risky they think you are. You need to find out because it needs to be in the price of the work you are bidding.

Public work has made some people a lot of money, but it takes a lot of bs, paperwork, time, meetings, training, safety programs, more bs and more paperwork and staff. If the economy is in the crapper it gets very competitive also. 

If you are just starting and not sure just follow one through the process and put numbers together just for yourself and see how you do. All it will cost you is time and gas to attend meetings, site tour and bid openings. You can get on the bid list and they will send all the addendums, etc to you but you don't have to submit a bid or anything. You can also get your face out there, maybe see if someone needs a subcontractor for a small portion of the job and you can bid that.


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## slowsol (Aug 27, 2005)

Couple clarifications: bid bonds are also in place so that you won't back out of your bid. I.e. You see the bid results, realize you're 40% lower than the next guy. Then start trying to figure out what you missed. Try to pull your bid because you used the wrong scale. They call your bid bond and your bonding company pays the difference between your bid and the next bidder to whoever requests the bond. Then you never get bonded again. Maybe not never. But not anytime soon. Especially if it's your first bond. Usually cost 10% of you bid. And most sureties waive the fee if you get the job and buy the P&P bond. 

P&P Bonds are typically one bond. Costs are around .5% for very stable, financially strong companies with a long history and lots of cash. I've seen them as high as 5% for the opposite. 


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## pritch (Nov 2, 2008)

Seems like city and county work always want bonds for even the smallest of jobs. I guess it weeds out the illegals. 

It always cracks me up when I think of this-when I went to work for these guys I work for, I noticed that the main licence, the Utah B100, had a work-in-progress limit of a billion dollars. When I asked about that they looked down all hang-dog and said "Yeah-but we can only bond for 3 or 4 hundred million at a time".

Kinda blew me away. My B100 had a limit of 36K and I don't know if I could have got a bond for 4K:laughing:


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## rino1494 (Jan 31, 2006)

I stay away from that stuff because I am too busy to deal with the paperwork. Someday I may have to get into it but hopefully not anytime soon. I did one job that was prevailing wage and I was a sub. I couldn't stand the paperwork just for that. Providing my payroll sheets and submitting everything in AIA format.

Question for those that do it. When I submit my bid bond, I have to pay for that up front even if I do not get the job, correct ?


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## dayexco (Mar 4, 2006)

I must have misread' 2 miles of pipe at 4k? Our agent didn't charge us for the bid bonds' and approximately 1% for p and p.

Have a CPA audited set of books to take with you to bonding agent. Makes the procedure much faster and simpler.

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## mattg2448 (Jan 26, 2015)

They have 2 miles split up into separate projects (each is a different channel) Each proposal is for roughly 8-1200 ft of ditch with restoration included, and the commissioner wants everything bid separate. Talked to my insurance company and he hooked me up, only 100 bucks, an application and current financial documents.


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## mattg2448 (Jan 26, 2015)

No bid bond required, but a P&P bond is.


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## slowsol (Aug 27, 2005)

mattg2448 said:


> No bid bond required, but a P&P bond is.


That's the ticket. :thumbsup:


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## dayexco (Mar 4, 2006)

My bonding agent didn't charge me for bid bonds. 

All a bid bond does is gives the project owner reimbursement for readvertising and time lost should you refuse to enter into the contract should you be low bidder. 

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