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Bond Claim
What is a Bond Claim?
A bond claim is a legal demand made against a construction bond to recover unpaid amounts owed by a contractor or project owner. Construction bonds are financial guarantees that protect project owners and subcontractors from financial loss if the prime contractor fails to meet their contractual obligations. When payment or performance issues arise, affected parties can file a bond claim to seek compensation from the bonding company.
There are several types of construction bonds, including payment bonds (which guarantee subcontractors and suppliers will be paid) and performance bonds (which ensure project completion).
For subcontractors, bond claims serve as an important safety net when general contractors fail to pay for completed work. Filing a bond claim can be complex and time-sensitive, often requiring specific documentation and adherence to strict deadlines. However, it provides subcontractors with a path to recovery when traditional collection methods fail, helping protect their business’s bottom line.
Siteline helps protect your bottom line too by streamlining billing processes and providing clear visibility into payment statuses, so you can identify and address collection issues before they require legal action. Learn more about Siteline here.
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Other construction terms
What is Underbilling?
Underbilling refers to a scenario in the construction industry where the actual costs incurred on a project surpass the billed amount for a specific time period. Often occurring unintentionally due to unexpected cost variations, it results in a deficit situation for the contractor. It is essentially an imbalance where the contractor has delivered more work or materials than they have billed the client for. Underbilling can strain cash flow and disrupt project schedules if not addressed promptly. While this might prove beneficial to the client in the short term, contractors need to ensure that they identify and rectify underbilling to maintain project profitability and financial stability.
What is a Cash Flows Statement?
A Cash Flows Statement, specifically in the construction industry, serves as a financial document that provides a detailed summary of a company's cash inflows and outflows over a certain period. This statement plays a crucial role in understanding the liquidity and solvency of a construction company as it helps track where the funds originate and where they get spent. It is segmented into three elements: operating activities (day-to-day operations of the construction business), investing activities (acquisition or disposal of assets), and financing activities (transactions with owners or lenders). It provides invaluable information for contractors, investors, and stakeholders, enabling them to scrutinize the financial health, operational efficiency, and investment potential of the construction company.
What is an Allowance?
In construction, an allowance is a predetermined dollar amount included in a contract to cover materials, fixtures, or finishes that haven’t yet been selected. Allowances are typically used for flooring, lighting fixtures, plumbing fixtures, appliances, or other finish materials (things that contribute to the project’s aesthetic) where the owner may want flexibility to make selections as the project evolves.
Here’s how allowances work: When contractors bid on a project, they’ll include specific allowance amounts (e.g., $5,000 flooring allowance). Once construction begins and the owner chooses actual materials, the costs are reconciled against the allowance. If the materials cost less, they receive a credit. If more, the owner pays the difference via a change order.
Siteline can help you track and manage those change orders, ensuring you get paid for that difference. Learn more about how Siteline streamlines change order management here.
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