There are generally three types of bonds used in construction – Bid, Payment and Performance. As subcontractors we usually only deal with two, Bid and Performance. So why are they treated differently and in different parts of the program?
Let’s start with the Performance bond. This is the last item in the Final Price tab in Bid Recap and uses a calculator. This calculator lets you ‘step’ the bond rate four times. Some contractors may deal with a bonding company that only has one flat rate regardless of the size of the job. If that’s the case, simply put that one rate in the lower left hand cell of the calculator and leave everything else empty.
Other contractors deal with a bonding company that has different rates for the first ‘step’ and a lower rate for any amount over that. For example, 2% on the first $100,000 and 1.5% for anything above that, or even more of a breakdown. In that case, use the steps as required.
Sometimes you may bid jobs that require a Performance Bond, other jobs may not. If the job requires one, simply leave the checkmark in the ‘Enable Calc’ box in the lower right hand corner. If this job does not require a bond, open the calculator by double-clicking in that cell and remove the checkmark. There’s no need to change numbers.
This Performance Bond is not only ‘stepped’, it is also calculated as a Margin instead of a Markup. This is because the Bonding Company will charge you their rate for the total value of the job, including the cost of the bond.
OK, so what about the Bid Bond that’s up in the Job Registration screen? How come it’s there and where does the cost get put into the Bid? It’s in the Job Registration screen and doesn’t get calculated anywhere because it doesn’t cost anything!! Your Bonding Company will generally provide a Bid Bond at no cost as a service to you, their customer.
The reason it’s part of the Job Registration screen is because it’s a convenient place to list the information that the Bonding Company requires. As with most of the areas of the Job Registration screen (except Job ID, Job Name and Tax Rates) the information is neither required nor used in the program, it’s simply there for your own information.