Get your Letter of Intent almost instantly
The term ‘Letter of Intent’ (LOI) is typically used to describe a letter from an Employer to a Contractor (or from a main Contractor to a Subcontractor) indicating the Employer’s intention to enter into a formal written contract for Works described in the letter, and asking the Contractor to begin those works before the formal Contract is executed. While an Letter of Intent may come in many forms, it’s essentially a communication expressing an intention to enter into a Contract at a future date.
When is a Performance Guarantee called on?
Building Contractors often ask us the question: When is a Performance Guarantee called on? When your company starts bidding on projects for cities, provinces or municipalities, you’ll be expected to provide assurance that you can meet the obligations detailed in the Contract.
This assurance comes in the form of a Performance Guarantee. Basically, what happens is that a surety company (an insurer or bank), for a certain fee, steps in and guarantees your performance. Surety companies don’t work directly with Contractors. Instead, they partner with brokerages like us.
Four types of Contract Guarantees and What They Insure
Contract Guarantees in the construction, engineering, manufacturing and mining service industries are almost mandatory. Our range of Construction Guarantees are as varied as your requirements. Here’s a short list of the four types of Contract Guarantees and what they insure.
What is not covered by a Contractors All Risk Policy?
The main part of the Contractors All Risks insurance is the Contract Works section which provides cover for the property being worked on (e.g. new house, etc.). But it’s important to be aware of what’s not covered by a contractors all risk policy, these are just a few examples:
What is Plant All Risk Insurance?
Your onsite machinery (plant) is vulnerable to a number of problems such as breakdowns, vandalism and theft. Missing a project deadline can be bad news for your bottom line as well as your reputation. Plant All Risk Insurance covers you for loss of, or damage to, construction plant and equipment whilst in storage, transit, on the contract site or being use as a tool of trade.
Does a Construction All Risk Policy cover damage to surrounding property?
Yes, damage to surrounding property is covered by a construction all risk policy, provided it’s included as an add-on to the Contract Works cover. This means an extra premium would be charged to get the specified surrounding property covered.
How do you get a Performance Guarantee?
When applying to get a Performance Guarantee, you’ll have to answer basic questions about your professional work experience and your company’s financial history. If your business has more than one owner, the financial credentials of all owners must be submitted.
What Are Latent Defects?
A Latent Defect is a defect that is not detected by ordinary inspection, but lies hidden until sometime later, when it’s discovered because it causes a problem that everyone can see. An example of latent defects would be weak concrete in part of a bridge column, that looks the same as strong concrete, but collapses when a heavy truck drives over the bridge.
What’s the difference between a Performance Bond and a Performance Guarantee?
The term Performance Bond is often misleading, which can leave contractors confused about the difference between a performance bond and a performance guarantee. Most construction Performance Bonds are actually Guarantees. Bonds and Guarantees are related but are different. The right to claim under a Guarantee is linked to non-performance of the underlying contract. Under a Bond, the bank usually pays on demand regardless of the underlying contract.
What is Construction Bidding?
Construction bidding is the process of submitting a proposal/tender to build or manage a construction project. Public tenders, or those with a government department, follow different rules than private tenders. They must be advertised in advance, and they allow any qualified contractors to bid if they choose to. Private owners may opt to limit the construction bidding process to contractors they have chosen as bidders.
How Does a Contractor Claim For An Extension of Time?
A Contractor can claim for an extension of time, thus extending the Due Completion Date for a project. He can also claim for any costs which will increase due to being on site for longer (called time-related General Items).
What is the Defects Liability Period?
The Defects Liability Period starts when the Certificate of Completion is issued and continues for the period agreed to in the Contract. During the Defects Liability Period, the Contractor has to obey all written instructions from the Engineer to carry out repairs and fix any defects which appear in the Permanent Works, so that, at the end of the Defects Liability Period, the Permanent Works are in the condition required by the Contract.
What is ‘Practical Completion’?
Practical Completion doesn’t mean the Contractor has finished the Works in every detail. It means the Works are sufficiently complete to be safely used by the Employer for the purpose he intended. The Contractor may still complete minor items and fix defects after Practical Completion, as long as the Employer isn’t inconvenienced.
Why is a Contract Works Policy Necessary?
When it comes to planning a new construction project, insurance doesn’t always get the priority it requires, with contractors often wondering whether it is really necessary to take out a contract works policy at all. Very often the contract works policy is arranged at the last minute, or even after the project has already started.
Plant Hire – Have you read the Contract?
Have you read your plant hire contract? You should get evidence of the plant hire contract when you hire in a concrete pump truck or any other item of plant.
The Benefits of Green Building. Are You A Good Corporate Citizen?
The GBCSA (Green Building Council of South Africa) strives for a greener South Africa. Benefits of Green Building > Increased property values & productivity
When a Disgruntled Employee Sabotages Your Structure…
Does Contractors Liability on the Contractors All Risk policy cover damages to a structure, caused by a disgruntled employee’s pre-meditated sabotage?
Contractors All Risk policy – Should You Put Your Name On It?
Dirk Gouws (Engineering Insurance expet, AC&E Engineering Underwriting Managers) explains the meaning of having your name on a Contractors All Risk policy.
Design and Construct Professional Indemnity cover
Andrew Brown (AC & E Professional Indemnity) – Why is Design and Construct Professional Indemnity cover a necessity for builders & construction contractors?
