Cost, Pricing, and Payment - Bonds
6 important questions on Cost, Pricing, and Payment - Bonds
What is a disadvantage of bonds?
What are bid bonds?
- guarantee that the supplier will accept the job and honor the contract if chosen as the successful bidder.
- assure that the suppliers bid is in 'good faith'.
- To assure that the supplier will post a performance bond.
What are characteristics of bid bonds?
- Generally from i percent to 10 percent of the value of the bid
- term or validity period of the bond is usually the time period the bid is valid, but can be extended at the request or demand of the customer
- If the supplier is chosen as the successful bidder, they keep the bid bond active until a contract is signed and a performance bond is posted.
- If they are not chosen as the successful bidder, the bond will be returned.
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What are performance bids?
The term of the performance bond is either receipt of an acceptance certificate for the job, or acceptance date plus any warranty period.
Usually have a value from 5 percent to 10 percent of the contract value, but could range as high as 100 percent.
What are Advance payment bonds?
What is a warranty bond?
If the supplier does agree ro extend the warranty, they must consider the cost this bond in addition to other costs.
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