Surety
What is a Surety?
A Surety, in the context of the construction industry, refers to a third-party entity that provides a guarantee or assurance to a project owner or client that a contractor will fulfill all obligations outlined in a contract. It is typically seen in the form of a surety bond, which protects the project owner against financial losses if the contractor fails to perform or complete the project as per their contractual obligations. The surety bears the risk of contractor's default and is legally responsible to either finance the project to completion or find an alternative contractor. The use of surety is common in projects, especially public construction projects, to ensure their successful completion.
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Other construction terms
What is Breaking Ground?
Breaking Ground, in the context of the construction industry, refers to the initial stage of a new construction project. This process often commences with a ceremonial event, typically involving the initial digging into the ground, symbolizing the beginning of the construction project. It is the first step towards site preparation which involves various tasks including soil testing, land clearing, excavation, and leveling among others. Breaking ground signifies the transition from the planning and designing phase into the physical building phase of a project. The event is usually marked with utmost importance as it indicates the project's commencement and is often attended by the project stakeholders, from contracting company representatives to local government officials. This signifies the beginning of the transformation of a blueprint into a tangible structure.
What is a Release?
In the construction industry, a release is a legal instrument that acts to terminate any legal liability between the releasor and the releasee, signed by the releasor. It is often used to settle disputes or claims, with one party agreeing to release the other from any existing obligations, responsibility or further legal action in return for a negotiated compensation. It may also refer to a point in a construction project where work is considered complete to a given level, allowing for payment or the transfer of responsibility to the next party involved in the process.
What is Lump Sum Billing?
Lump Sum Billing in the construction industry refers to a fixed contract price for the completion of all work required for a specific project. This means that the contractor agrees to complete the whole project at a specific set cost irrespective of the amount of resources and time spent on the project. The contractor bears all the risk and is responsible for any cost overruns. Lump sum billing is commonly used in construction due to its simplicity, as the entire project is billed one time for one set amount.