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Originally Posted by Harley What is the purpose of a bid bond? and how does it work? |
The
bid bond demonstrates to the owner that you've been prequalified to do the work proposed - in terms of your experience and your finances. The bond amount is generally a percentage of your contract estimate. That amount is calculated to provide payment for damages to the owner if you fail to enter into the contract at the price submitted. The owner would then award the job to the second lowest, or qualified, bidder, taking the value of your
bid bond to hopefully fully cover the difference.