Our Construction Guarantees for the Civils Industry include:

Bid / Tender Bonds

When tenders are submitted, they are usually accompanied by Bid/Tender Bonds. The purpose of the Bond is to compensate the employer for costs incurred in the event that the company, which is successful in being awarded the tender, does not or cannot take up the contract.

Performance Bonds

This is probably the most common form of Guarantee, which protects the Employer/Principal against the risk of the contractor failing to comply with the conditions of the contract.

Traditionally, the guarantee amount is equal to 10% of the contract sum. However, recently the new format JBCC 'fixed' (7, 5%) guarantee or 'variable' (12, 5% reducing to 2%) guarantee was introduced, of which the latter version includes a Retention money element.

Advance Payment Guarantee / Bond  

Some contracts make provision for Employers / Principals to pre-finance a contractor by making payments before commencement of the contract. The Employer / Principal secure such a risk by acquiring an advance payment guarantee / bond in return. 

Usually, the guarantee amount will decrease in accordance with the percentage of the work certified. The guarantee / bond will be equal to the pre-financed amount - usually 30%.

Retention Guarantee / Bond

These bonds effectively replace the actual retention fund. Most contracts make an allowance for the Employer / Principal to retain a percentage of the funds payable to the contractor during the construction period as a form of security against default or defective work.

How much do you know about a Construction Guarantee?

A principal of a large project will often demand that the various contractors on the project obtain performance guarantees/bonds to protect their interests in case the contractor is unable to complete the project because of insufficient financial or working capabilities.  Whilst most banks do offer a facility for their clients to produce guarantees or bonds on their large projects, taking a guarantee from a bank is ultimately not the safest option for business or the cheapest.  Usually the bank’s risk is protected by 100% collateral, with the same being accessed as soon as a principal calls on the guarantee.  If you are intending to do many projects where guarantees will be demanded, we can set up a facility with an insurer to grant you the necessary guarantees.  If a guarantee is then called on by the principal, mediation & investigation will all be sufficiently undertaken to ensure that only the portion of the project not completed is paid out for by the guarantee.