Builder's & Contractors - A few questions - Page 2

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  1. #11
    CrazyRuskie's Avatar
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    For those of you involved with commercial construction, what is the typical cost of a performance bond. I am just starting to bid commercial work, and would like to get an idea of the costs involved.

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    Done_ is offline Senior Member
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    I am not in the home building biz but I can speak to you about a customer's POV. We have bought 3 houses and 2 condos in the last 2 years so my life is pretty much "moving stuff".

    For renovations and remodels frankly I'm too lazy to do my own research and pick an apropriate company to do the work so I rely on my real estate broker. He has reffered us painters, flooring guys, roofers, general contractors etc...

    So if I were you, I would try to develop a good relationship with a couple of high end real estate brokers in your area.

    Best of luck!

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    Quote Originally Posted by CrazyRuskie View Post
    Yeah, I've lost quite a few projects due to lack of financing for my clients... it's a real pain in the ass!
    yep, this is what has "frozen" our economy.

    it amazes me, the banks CREATE the problem, now they put the nail in the coffin. sheesh.
    Paradise 'ain't cheap.

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    Anyone handle performance/payment bonds or have a reference for a good bonding co? Please PM me if so. I need bonds for projects I'm bidding.

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    Quote Originally Posted by CrazyRuskie View Post
    Anyone handle performance/payment bonds or have a reference for a good bonding co? Please PM me if so. I need bonds for projects I'm bidding.
    A lot of insurance/bond companies have really tightend up on issuing them for construction/real estate projects. Some won't issue them at all.
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    Quote Originally Posted by CrazyRuskie View Post
    For those of you involved with commercial construction, what is the typical cost of a performance bond. I am just starting to bid commercial work, and would like to get an idea of the costs involved.
    Bonding is typically in the 1 - 2.5% range depending on the size of bond, your financial strength, and others.

    Lately, I have noticed a lot of GCs come out of the residential market and try to bid commercial projects. They are usually coming in with bids 25% lower than the commercial GCs BUT that is because they usually are off on estimating things. Be very aware of the scope of the project you bid.

    For me, I am a supplier/manufacturer/sub for different projects. I have a residential division, commercial division, and an institutional division and the latter two are also facing problems with residential only companies bidding their work. It is a very bad combo having a non-commercial experienced GC and subs.

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    We've pretty much moved all of our new construction from custom homes towards SLFs(Supportive Living Facilities) many of which are operated by management companies that look for volunteer board and council members(good way to get involved, and with the community)...if you can get in with them there are several revenue opportunities...building, ownership w/ long-term lease opps etc...often they are built on larger commercial properties with other projects going up! We are currently doing a 3 story 130 unit(plus common areas) stick and panel building...as long as you have the right management its like a really, really big custom home! That project is somewhere in the $16M range(Northern Ill) and we've got another 72 unit coinciding at around $9M.
    "Make no little plans, they have no magic to stir men's blood!"

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    Quote Originally Posted by Haz-Ben View Post
    We've pretty much moved all of our new construction from custom homes towards SLFs(Supportive Living Facilities) many of which are operated by management companies that look for volunteer board and council members(good way to get involved, and with the community)...if you can get in with them there are several revenue opportunities...building, ownership w/ long-term lease opps etc...often they are built on larger commercial properties with other projects going up! We are currently doing a 3 story 130 unit(plus common areas) stick and panel building...as long as you have the right management its like a really, really big custom home! That project is somewhere in the $16M range(Northern Ill) and we've got another 72 unit coinciding at around $9M.
    Ironically, that is the area that two of my residential people are headed.

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    Quote Originally Posted by b9ev View Post
    Bonding is typically in the 1 - 2.5% range depending on the size of bond, your financial strength, and others.

    Lately, I have noticed a lot of GCs come out of the residential market and try to bid commercial projects. They are usually coming in with bids 25% lower than the commercial GCs BUT that is because they usually are off on estimating things. Be very aware of the scope of the project you bid.

    For me, I am a supplier/manufacturer/sub for different projects. I have a residential division, commercial division, and an institutional division and the latter two are also facing problems with residential only companies bidding their work. It is a very bad combo having a non-commercial experienced GC and subs.
    We have the estimating down. We've done commercial work in the past and are aware of the hard costs, I just have never needed any performance bonds and am only now looking at government work etc hence why I ask. Thanks for all the info!

  11. #20
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    Quote Originally Posted by b9ev View Post
    Ironically, that is the area that two of my residential people are headed.
    Well, all them baby-boomers are gonna need somewhere to live starting in the next 7 or so years!!
    "Make no little plans, they have no magic to stir men's blood!"

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