Performance Bonds Remain Available in the Construction Market

The Coronavirus pandemic has had a huge impact on the construction market. One specific area we have received a large proportion of interest in at Kerry London is the ongoing ability to source performance bonds.

Thankfully for the construction sector, a good number of the bond providers we use at Kerry London are still very much open for business. That said, they have unquestionably adopted a far more cautious and considered approach. As is the case with many businesses, they have adapted their processes, as well as adding a number of more detailed levels of checking to their evaluation and ultimate decision-making.

Specifically, providers are looking at businesses’ short-term resilience to the current situation. This will include any actions that they have taken in the last few months, as well as an overall ability to maintain resilience in the immediate future.

What type of information are the bonds providers looking for?

During the lockdown, we have gained some invaluable insight into arranging bonds in the current climate for our existing clients. This has allowed us to put together a list of the key additional points bond providers are looking for.

This information will help you so that you can be prepared should you be looking to arrange a bond now, or in the near future.

• An up to date Cashflow Forecast (for at least the next 12 weeks) – to include expected income for current work in progress and projected company (group) bank balances.
• Evidence of actions that have been taken to reduce costs. Such things include details of ‘payment holidays’ or reductions in amounts payable to HP/finance providers.
• Details of precautions / processes that have been implemented on site.
• Percentage of workforce on each of your sites currently and whether any have been, or remain, furloughed.
• Any recent discussion with your bank[s] and detail on the outcome.
• Whether you have applied for Government Aid.
• Latest management information (consolidated if appropriate).
• Whether employers are currently paying you promptly, as per the contract terms.
• Whether or not the company has issued an ‘extension of time’ notice to the employer for any of the sites.

As well as this, in general, the terms being offered are on a stricter level of wording, specifically on the release event.

If you already have a bond, or bonds, in place, our advice is to keep a good flow of communication with your insurer, providing regular updates. This is particularly key for those that are close to the release event, or even overdue.
Should you be looking for any further advice or detailed assistance with sourcing a bond, our experts would be happy to assist you. We have extensive experience in this complex field and have arranged more than £5bn worth of contract value in the last three years alone.

You can find out more here:

http://kerrylondon.co.uk/products/bonds/, or drop the team an email using bonds@kerrylondon.co.uk and we will get back to you straight away.

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