The Importance of Surety Bonds
Surety bonds in Pennsylvania are essential for companies in the construction industry. It can be very difficult to find clients who will not require a bond.
The Need for Surety Bonds
In decades past, clients often hired construction firms based solely on their reputation. This left clients with a large exposure. If the construction company were delayed for any reason, the client would bear the brunt of the associated business costs. These could include:
- Lost business as a result of delays
- Delay expenses connected to other contractors such as plumbers, electricians, and network engineers.
- Delay expenses related to post construction activities such as decorating, furnishing, and equipping the building.
The problems could be even bigger if the construction company defaulted entirely.
This exposure created the need for risk management. This was supplied in the form of surety bonds in Pennsylvania. Construction firms purchase these bonds as a safety measure for their clients. If the firm defaults, the clients are reimbursed for their business losses.
The Benefits of Surety Bonds
Surety bonds offer two great benefits to clients of construction firms:
- The exposure for construction default is transferred from the client back to the construction firm. In addition, the costs of this risk management are paid by the construction company.
- Construction clients can depend more on contracts and perform less investigation on reputation.
An excellent strategy for a construction firm is to choose a provider of surety bonds in Pennsylvania to match their business. In this way, they are prepared for the largest segment of potential clients.