Paid when paid contracts/subcontractor contracts/Neill Bonding & Insurance/GA, LA, FL, AL, MS, MO, KY, AR, SC/Contruction Contracts

When it comes to contracts, knowledge is power.  The contract documents, which include the plans, project manual ( include the general conditions, supplemental conditions, technical specifications, etc) and the contract, not only define the scope of work but they also provide a set of rules and procedures that all parties are to follow.  This includes contract termination rights, change order and payment procedures, insurance requirements and a host of other important information.

The contract usually defines the powers and limitations that each party has in enforcing the rules and procedures.  This is an extremely powerful document but most people fail to read the entire contract before they sign it. 

Key items to look for in a contract:

1.  Defective plans or specifications.  Look for anything that  would be unreasonably difficult to perform and then clarify what is specifically required in the contract itself.  Unless you write in the contract itself that your proposal or bid is included, once you sign the contract, your proposal or bid is not part of the agreement.

2.  Unclear or generic scope of work.  If the scope of work does not have a clear and detailed description of the specific tasks, getting credit for extras or changes may be difficult because these will not be easily measured against the original intended scope of work.  How many times do change orders get disputed because one party believes they are part of the scope of work and the other believes they are an extra?

3.  Difficult payment procedures.  Many general contractors’ contracts say that the subs get paid only if, or when, the general gets paid.  While our courts have outlawed these provisions, people still tend to follow them during the course of the project.  Who wants to wait for the end and battle it out in court just to get paid?  Also, be aware of payment procedures that allow the owner or general to reject the entire pay application due to a minor defect in the application itself.

4.  Inconsistent details.  A common example is the stated quantity or quality of a certain material listed in the specs does not match up with what is sown on the plans or an existing condition does not match the actual site conditions.  It is imperative that those discrepancies be addressed in writing as soon as you know there is a problem. 

If you know of the issue before the contract is signed, do NOT sign the contract until the issue has been resolved and appropriate changes are made to the contract before signing.

5.  Unrealistic or undefined project schedules.  If an owner or general provides you with the schedule, make sure it it reasonable for your work.  If you can’t make the schedule, DON’T sign the contract.

6.  Vague timing for submittal reviews or request for information.  The contract documents should specify how long it will take the architect to review submittals or respond to requests for information, so that you will know what to expect to coordinate the information with the timing of work being performed on your project. 

7.  Strict notice procedures for delays, changes and/or extras.  Many contracts have provisions that if you do not provide written notice within the time required, you waive any right to get additional compensation for that extra, changed work or delay. 

8.  Decisions at the owner’s or contractor’s sole discretion.  Anything that allows an extremely subjective opinion as a final determination does not bode well for the person on the receiving end of that decision.

9.  Incorporation of the prime contract.  Subcontractors that reference the prime contract usually mean that the subcontractor is obligated to the general to the same extent the general is obligated to the owner as it relates to the sub’s work.  This applies to notices, insurance and indemnity.  Unless the sub reads and understands what obligations the prime contract imposes on the general contractor, there is no way the sub knows what they are getting into. 

Information provided by Modern Contractor Solutions.

Construction Contracts/Construction Project Contracts/GA, KY, LA, FL, MO, AL, TN, SC, AR, MS/Neill Bonding & Insurance/Contract Surety Bonds

When it comes to contracts, knowledge is power.  The contract documents, which include the plans, project manual ( include the general conditions, supplemental conditions, technical specifications, etc) and the contract, not only define the scope of work but they also provide a set of rules and procedures that all parties are to follow.  This includes contract termination rights, change order and payment procedures, insurance requirements and a host of other important information.

The contract usually defines the powers and limitations that each party has in enforcing the rules and procedures.  This is an extremely powerful document but most people fail to read the entire contract before they sign it. 

Key items to look for in a contract:

1.  Defective plans or specifications.  Look for anything that  would be unreasonably difficult to perform and then clarify what is specifically required in the contract itself.  Unless you write in the contract itself that your proposal or bid is included, once you sign the contract, your proposal or bid is not part of the agreement.

2.  Unclear or generic scope of work.  If the scope of work does not have a clear and detailed description of the specific tasks, getting credit for extras or changes may be difficult because these will not be easily measured against the original intended scope of work.  How many times do change orders get disputed because one party believes they are part of the scope of work and the other believes they are an extra?

3.  Difficult payment procedures.  Many general contractors’ contracts say that the subs get paid only if, or when, the general gets paid.  While our courts have outlawed these provisions, people still tend to follow them during the course of the project.  Who wants to wait for the end and battle it out in court just to get paid?  Also, be aware of payment procedures that allow the owner or general to reject the entire pay application due to a minor defect in the application itself.

4.  Inconsistent details.  A common example is the stated quantity or quality of a certain material listed in the specs does not match up with what is sown on the plans or an existing condition does not match the actual site conditions.  It is imperative that those discrepancies be addressed in writing as soon as you know there is a problem. 

If you know of the issue before the contract is signed, do NOT sign the contract until the issue has been resolved and appropriate changes are made to the contract before signing.

5.  Unrealistic or undefined project schedules.  If an owner or general provides you with the schedule, make sure it it reasonable for your work.  If you can’t make the schedule, DON’T sign the contract.

6.  Vague timing for submittal reviews or request for information.  The contract documents should specify how long it will take the architect to review submittals or respond to requests for information, so that you will know what to expect to coordinate the information with the timing of work being performed on your project. 

7.  Strict notice procedures for delays, changes and/or extras.  Many contracts have provisions that if you do not provide written notice within the time required, you waive any right to get additional compensation for that extra, changed work or delay. 

8.  Decisions at the owner’s or contractor’s sole discretion.  Anything that allows an extremely subjective opinion as a final determination does not bode well for the person on the receiving end of that decision.

9.  Incorporation of the prime contract.  Subcontractors that reference the prime contract usually mean that the subcontractor is obligated to the general to the same extent the general is obligated to the owner as it relates to the sub’s work.  This applies to notices, insurance and indemnity.  Unless the sub reads and understands what obligations the prime contract imposes on the general contractor, there is no way the sub knows what they are getting into. 

Information provided by Modern Contractor Solutions.

Construction Contract Change Orders/Contract Surety Bonds/Bonding/Bonds/Neill Bonding & Insurance/MO, FL, GA, AL, AR, TN, SC, MS, NE, KS, LA, KY

Is there an additional cost to onstruction contract change orders?  Remember, the bond tracks the contract.  If the contract amount increases then so does the bond amount.  With that said, if there is a change order associated with a bonded project then an additional premium charge can be expected.  If the change orders are not reported at the time of the change you can expect the additional premium to be charged at the end of the project.  Don’t forget to include the additional bond premium in your cost of the change order.

Pay When Paid/Pay if Paid/Construction/KY, LA, KS, NE, MS, SC, TN, AR, AL, GA, FL, MO/Bonding/Bonds/Neill Bonding & Insurance

“Pay When Paid”

—Suspends the general contractor’s obligation to pay the subcontractor for a reasonable time while the general contractor attempts to collect payment from the owner.“Pay If Paid”

—Establish the payment by the owner to the general contractor as a condition precedent to the general contractor’s obligation to pay the subcontractor.

Construction Contracts/Contract Surety Bonds/Neill Bonding & Insurance/Bonding/Bonds/Key Contract Terms

Four key items to look for in a Construction Contract. 

1.  WARRANTY:  Preferably a one year warranty, which is standard.  Make sure the warranty does not extend beyond two years.  Only a standartd level of maintenance and not a higher stander.  No “efficiency guarantees” taht state the compelted project will functuion up to specific standards as required.  If not, the contractor must re-do work until acceptable.  As a result, the contractor may become responsible for the design of the project and responsible for any errors of the engineer or architect. – VERY RISKY

2.  LIQUIDATED DAMAGES fMake sure the LD’s are spelled out in a specific dollar amount.  Typically the GC’s Liquidated Damages are a pass-through to sub contractors.  Know up front what these charges are.

3.  CIRCUMSTANCES AROUND DEFAULT:  The circumstances around a default must be specific.  The surety must be a party to any and all default notification.  Many times a contract may read that the Owner/General Contractor can default a contractor, complete the work at whatever cost and means necessary without ntoifying the surety and simply send them a bill. -Very Dangerous.  The subcontractor or surety must have a certain specified amount ot time to solve or” cure” the problem.

4.  PAYMENT SCHEDULE:  It must be clearly stated how the payment schedule is set up, regarding invoicing, receiving checks, holding retainage, etc.

Liquidated Damages/Contract Surety Bonds/MS, AL, FL, GA,KY, LA,NE, SC, TN, AR, GA, MO/ Neill Bonding & Insurance/Bonding/Bonds/Construction

What are Liquidated Damages? 

A liquidated damages provision is an agreement by the parties on the dollar amount of damages caused by a default, specifically an inexcusable delay that extends the completion of the contract beyond the completion date. Usually, the liquidated damages are expressed in terms of a fixed dollar amount of damages for every day that the contract extends.

A Rated Surety Company/Surety Bonds/MS/AL/FL/GA/Neill Bonding & Insurance/Bonds

A surety that wants to write bonds for federal government construction projects must have a certificate of authority issued by the U.S. Department of the Treasury. The Treasury Department conducts a financial review of the surety and sets a single bond size limit for the surety. The Treasury Department maintains a list of surety companies that it has qualified to write surety bonds on federal government projects.

Treasury Department Circular 570: Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies is published in the Federal Register on July 1 each year. A copy of the most current “Treasury List” may be accessed at www.fms.treas.gov/c570/index.html.

Information provided by Surety Information Office

Surety Bond Guarantee/SBA/small contractors/bid, performance and payment bonds/bonding/contract surety bonds/Neill Bonding & Insurance

 

For more than 30 years, the U.S. Small Business Administration’s (SBA) Surety Bond Guarantee (SBG) program has helped small and emerging contractors who have the knowledge and skills necessary for success, but lack the combination of experience and financial strength to obtain bonds through regular commercial channels. SBA guarantees bid, performance, and payment bonds issued by surety companies to small and emerging contractors and reimburses the surety a percentage of loss if the contractor defaults. This government guarantee allows sureties to write bonds for contractors who would not otherwise meet their minimum standards – thus providing small and emerging contractors with contracting opportunities for which they would not otherwise qualify.

Information proivded by Surety Information Office

New contractor needing a Contract Surety Bond/AL/MS/FL/GA/Bonding/Bonds/Neill Bonding & Insurance/New Contractor

The surety industry is committed to helping new and emerging contractors obtain their first bond, coach them on the surety industry and increase their bondability. Many surety companies have developed programs especially for these new contractors.

Neill Bonding & Insurance Services, Inc. Specializes in Contract Bonds for all types of contractors, new and experienced.  Give us a call and we will be glad to discuss options for the new contractor to obtain a contract surety bond.

We Specialize in Contract Surety Bonds/AL/MS/FL/GA/AR/SC/KY/KS/NE/TN/LA/Neill Bonding & Insurance Services/bonds/bonding

At Neill Bonding & Insurance Services, Inc. we Specialize in Contract Surety Bonds. We are dedicated to the construction industry and service the needs of all types of contractors.   We represent many of the top Surety Companies in the country and have an excellent rapport with them all.  With our markets, we can offer the most competitive rates and  bond lines, along with the best service in the industry.