Question and Answer Session with Swiftbonds
We recently got a great woodworking project. As a part of that contract, it required us to get a “Performance Bond,” which is something that I had never, ever heard of. So, we asked around and found a great company called Swiftbonds. They helped us through the whole process and got us the required bond for the project. So, we sat down with them and did a quick Q&A on what this was all about.
Q: Why did we have to get a Performance Bond?
Swiftbonds Answer: The very simple answer is that it was required in the contract. Without that requirement, most companies do not carry a bond on them generally. The more complicated answer is to discuss why it was in the agreement in the first place. For many contracts such as yours, there is a governmental entity involved. These governmental bodies require a performance bond, which is a type of surety bond, so that the company entering into the contract will live up to their promises in that contract.
That is, let’s assume that all of your equipment gets destroyed in a fire and you cannot complete the work. What happens then is that the government looks to the surety (the big insurance company that actually wrote your bond) and asks them to complete the work. The surety, after determining that you cannot complete the job, will go out and find another company to finish the work. If the cost to finish the work is more than what the surety gets paid for that work, then the insurance company will come to you guys to pay for any of that deficit. So, if you had any insurance proceeds for the fire, some of those funds would be used to pay the surety insurance company back for any of their loss on the job. But in any event, the government gets their project completed. They don’t have to deal with the risk and uncertainty of this project going uncompleted for years and years, like they would have prior to a surety bond being issued.
Q: So what is a Performance Bond?
Swiftbonds Answer: A Performance Bond is a type of surety bond. What that means is that it is a three-party contract between you and another contracting party and an insurance company. The insurance company is the surety. The surety is the party that guarantees that the work will be done (i.e, performed) according to the terms of the contract. The owner of the project wants to get the bond so that the project will be completed. You get the fidelity bond so that you can get the work, first, but also so that the owner knows that you have the capabilities of completing the work. This can be quite a competitive advantage.
Q: So why did it cost so much?
Swiftbonds Answer: [laughing] Actually, it doesn’t cost that much. The cost for you was only 3% because it was quite a small job (in the large scheme of things – I know it was a great contract for you guys). For many other contracts, the bond percentage is even lower as the amount of the job is greater. However, I do get your point. You need to realize, however, that bonds are not written like insurance contracts. Instead of assuming that there will be losses (like in insurance) a performance bond is written so that there is an assumption of no risk whatsoever. That way, the surety can write bonds for such a low amount. These low premiums go to unforeseen losses (like when an otherwise good company goes bust) or for crazy problems (like those that happened after the financial meltdown a few years ago). If these contracts were written like normal insurance policies then the premium would be somewhere around 30-40%, which is just not financially feasible for anybody.
We really did appreciate working with you on this account and look forward to a long and prosperous relationship. Again, best of luck with your project and please stay in touch. Swiftbonds.
Woodworking 101 – Common Woodworking Joinery
I ask a couple of my woodworking friends to help me talk to you about some common woodworking joinery. Woodworking joinery is the method of joining two pieces of wood together to create a more complex item. Woodworking Joinery is the one thing we as woodworkers need to know and this video talks about 4 common woodworking joints that you are most likely to use in your projects.
In this video you will learn about the following joints
Half Lap Joints – Presented by Jay Bates JaysCustomCreations.com
Making a Kerf Maker Jig – http://www.youtube.com/watch?v=iL5lrmrbgKc
Mortis and Tenon Joints – Presented by Brian Grella GarageWoodworks.com
Tenon Jig for the Table Saw – http://www.garagewoodworks.com/jigsfixtures.php
Miter Joints – Presented by Steve Ramsey Woodworking For Mere Mortals
Steve’s YouTube Channel – http://www.youtube.com/user/stevinmarin
Build a Miter Jig – http://www.youtube.com/watch?v=H00prACPflw
Box Joints – Presented by Laney Shaughnessy
Making the Box Joint Jig –
http://www.youtube.com/watch?v=3xDXePtofxE Part 1
http://www.youtube.com/watch?v=RJeYeQPpzSU Part 2