Marsh
About Us
Marsh is the world’s leading insurance broker and risk advisor. We provide industry-focused brokerage, consulting, and claims advocacy services, leveraging data, technology, and analytics to help reduce our clients’ total cost of risk. We help our clients and colleagues grow and nurture the prosperity of our communities - by helping them build the confidence to thrive and providing a distinct perspective.
Construction Guarantees And Bonds
The construction industry operates in an increasingly competitive and evolving industry environment. Construction companies face a variety of challenges due to the current economic slowdown, such as shrinking employer budgets, declining backlogs, and tougher credit line renewals. Consolidation in the industry and pressures to reduce business costs create additional challenges.
Despite these challenges, our construction clients continue to need a variety of surety bonds to satisfy contractual requirements and comply with regulations. Surety bonds are required to secure bid proposals and guarantee the performance of contracts once awarded. Therefore, companies today need to work with surety professionals that can offer exemplary services, expedite processes, and obtain the most favorable terms and conditions for their clients.
Surety bonds are a form of credit, similar to obtaining a line of credit from a bank. Upon issuing a bond, a surety company guarantees a client's performance of a specified obligation. Prior to issuing a bond, the surety company underwrites the contractor's capabilities and financial condition as well as the contract being guaranteed.
Marsh's Credit Specialties professionals can guide you through the process and assist you with obtaining the surety bonds required by your company. Below are the most common types of construction bonds:
Bid/Tender Bond
When tenders are submitted, they are usually accompanied by Bid/Tender Bonds. The purpose of the bond is to compensate the employer for costs incurred in the event that the company, which is successful in being awarded the tender, does not or cannot take up the contract.
Performance Bond
This is probably the most common form of guarantee, which protects the employer against the risk of the contractor failing to comply with the conditions of the contract.
Retention Bond
These bonds effectively replace the actual retention fund. Most contracts make an allowance for the employer to retain a percentage of the funds payable to the contractor during the construction period as a form of security against default or defective work.
Maintenance Bond
These bonds cover against defective workmanship or materials after completion and they also incorporate a obligation guaranteeing efficient or successful operation or other obligations of like intent and purpose.
Advance Payment Bond
Some contracts make provision for employers to prefinance a contract by making payments before commencement of the contract. The employer secures such risk by acquiring an advance payment bond in return. Usually, the guarantee amount will decrease in accordance with the percentage of the work certified.
Supply Bonds
Supply bonds guarantee that ordered materials will be delivered. Such bonds generally are employed if an item is critical, time-sensitive, hard to find, or proprietary. Supply bonds may guarantee only a purchase order, so the terms and conditions of that order should always be carefully drafted. The cost of these bonds is usually minimal.
Material on/off Site Guarantees
Some contracts may make provisions for the payment to the contractor for materials delivered on site but not yet built into the contract and therefore not yet claimable under the contract as detailed in the bill of quantities
Suretyship is a relationship-driven business. The sureties extending credit to you want to understand your company's operations, its business philosophy, its financial situation, and more. Inadequate representation can have a dramatic effect on your surety program. Marsh's surety specialists are your advocates during surety transactions. Because many surety team members have significant brokerage and underwriting experience, they can make sure you approach surety markets with the right strategy for success. When questions arise, Marsh's Surety Practice has the established relationships to arrange face-to-face meetings between you and your surety's decision makers.
Contact Details
Contact Person: Sean De Matos – Ala
Email: sean.ala@marsh.com
Marsh Proprietary Limited | Co. Reg No. 1999/000348/07, FSP No. 8414
Corner 5th Street and Fredman Drive, Alice Lane Building 1, Sandton, 2196
Private Bag X14, Benmore, 2010