When it comes to business, performance bonds are very helpful. However, that doesn’t mean that everyone in business knows what they are. Do you know what performance bonds are and how they help business?
We have an advantage over those who went before us, before the internet. Back a few decades, it was easier for businesses to keep their tricks secret and by doing so, other businesses did not know that some options are (or were) available to them. However, that is not the case now, with the internet at our fingertips and ready to spill the secrets and tips for effective business deadlines.
The Performance Bond
Performance bonds do what they implied that they do. They help to guarantee performance in, say, a development situation. Think about it. No one wants to invest money into a project unless they know that that project will be completed. The same thing is true of development. So, that is where the performance bond comes in, to guarantee that that development work will occur.
The performance bond is a contract just like any other contract. However, it has money attached to it. Not that all contracts do not have that, or some exchange, factored somewhere within the wording of the contract, but the idea is that if the work is not performed, that the individual is compensated, monetarily. Hence, the concept of a performance (as in “get the job done”) guarantee on the project.
Stories of Performance Bonds
Curious to see a performance bond in action? This year, in Hartford, Connecticut, a performance bond was called in because work was not getting done on time and there were overages. It was the work being done on the Yard Goats Stadium, and this is an example of how the performance bond plays its part in guaranteeing that work is done, and when it is not done, the bond can be called in, as it was in this stadium’s case.
There is such a thing as “self-bonded,” where the company performing the work actually guarantees the work themselves. This occurred in Seattle, Washington, in a surface coal mining reclamation project. That said, it did not have a happy ending.
This doesn’t mean that every self-bonded performance bond is a bad idea, but it does give cause to consider options and ensure that one has done their homework before considering a performance bond.
Another use for performance bonds is in helping to keep things equitable in cases of potential multiple owners of a ball team. This was done in Indiana, recently, and was a way of actually diverting the multiple team owner scenario. This approach helped the bidding process to stay close to the original objectives.
These are just a few examples of the use of bonds and how they can help a business to achieve the goals and objectives. It isn’t for everyone, but if your business has to do with development or a large project (even involving the internet), this may be an option that you want to consider.