CAE 460 – KL
February 2, 2015
2.1: What are the three major types of construction bonds? Why are they required? Name three items that affect bonding capacity.
Three major types of construction bonds are: Performance Bonds, Payment Bonds, and Securing Bonds. They are required because a bond allows one party (Obligee) to protect itself against default in a relationship with a second party (Principal). A third party (Surety) provides this protection. Three items that affect bonding capacity are: current ongoing work, amount of cash, and level of technical experience of the construction professional.
2.2: In what major section of the contract is the time duration of the project normally specified?
The time duration of the project is normally specified in the supplementary conditions.
2.3 Who are the three basic parties involved in any construction bonding arrangement?
The three basic parties are: the Obligee (owner), the Principal (contractor), and the Surety (bonding company).
2.4 What type of bond guarantees that if a contractor goes broke on a project the surety will pay the necessary amount to complete the job?
A payment bond.
2.5 What is the purpose of the following documents in a construction contract?
a. General conditions
b. Special conditions
d. Technical specifications
a. The purpose of the general conditions is to provide the legal framework for the construction contract and promote fairness among all contracting parties. They detail the rights, responsibilities, and relationships of the owner, contractor and architect or engineer who will be working with both parties throughout construction. b. The purpose of the special conditions is to identify any specific conditions and clauses for each particular project or job.
c. The purpose of the addenda is to make changes, corrections, additions, or support the information in the original construction contract....
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