CEE 460 Quiz 2 Questions With Complete Solutions
How much is a bid bond?
A bid bond is 5-10% of the contractors bid amount
Performance bonds
A performance bond is a guarantee from a third party, like a
surety company, that a construction contractor will complete a
project according to the contract
A surety bond
It's a promise from a surety company (the guarantor) that
the principal (the contractor) will fulfill their obligations to
the obligee (the project owner)
What is the initial face value of a performance bond?
The value of the contract, if contractor defaults the owner if
protected and it covers the warranty period.
Change orders
They are used to document changes (ex. Unforeseen
circumstances, client request, design updates, or material
substitutions) covers cost +time
Statutory
mandated by law
Common law
, Laws in place on how a bond can be used, if the project is
private there is no law, as bonds are an additional cost to the
owner bonds guarantee performance, the bond premium will be
in contractors bid to offset the cost
Miller Act
A federal law that requires contractors on a federal construction
project exceeding 100k to post separate performance and
payment bonds guaranteeing payment for material and labor
Bond premiums
the fee a contractor pays a surety company for a construction
bond
Indemnity
a promise to cover someone else's costs if a certain event
happens on the job.
What are the 3 Ls
Land, Labor, and Lending
Contract provisions
a specific term or condition within a legal agreement that
details the rights, responsibilities, and obligations of the
parties involved
bond capacity
the maximum amount of money a construction company can
get in surety bonds
Default actions
How much is a bid bond?
A bid bond is 5-10% of the contractors bid amount
Performance bonds
A performance bond is a guarantee from a third party, like a
surety company, that a construction contractor will complete a
project according to the contract
A surety bond
It's a promise from a surety company (the guarantor) that
the principal (the contractor) will fulfill their obligations to
the obligee (the project owner)
What is the initial face value of a performance bond?
The value of the contract, if contractor defaults the owner if
protected and it covers the warranty period.
Change orders
They are used to document changes (ex. Unforeseen
circumstances, client request, design updates, or material
substitutions) covers cost +time
Statutory
mandated by law
Common law
, Laws in place on how a bond can be used, if the project is
private there is no law, as bonds are an additional cost to the
owner bonds guarantee performance, the bond premium will be
in contractors bid to offset the cost
Miller Act
A federal law that requires contractors on a federal construction
project exceeding 100k to post separate performance and
payment bonds guaranteeing payment for material and labor
Bond premiums
the fee a contractor pays a surety company for a construction
bond
Indemnity
a promise to cover someone else's costs if a certain event
happens on the job.
What are the 3 Ls
Land, Labor, and Lending
Contract provisions
a specific term or condition within a legal agreement that
details the rights, responsibilities, and obligations of the
parties involved
bond capacity
the maximum amount of money a construction company can
get in surety bonds
Default actions
