Clients under spotlight after bond bombshell

Grant Prior 10 months ago
Share

Clients are being urged to ease bond conditions as contractors struggle to get cover in a tightening market.

The Enquirer revealed yesterday that insurance giant QBE is pulling-out of the construction bonds market for major contractors.

The news sent shock waves through the industry raising fears that new projects could be delayed.

Now contractors are calling on clients to ease bond requirements to avoid the market stalling.

Clients typically demand a performance bond covering 10% of the contract value as a guarantee that the work will be done and a protection against insolvency.

One contractor said: “Hopefully clients will start having a proper look at this or the whole market could stall.

“Things were bad enough before but losing a major bonds supplier like this is a disaster.

“Clients could look for a lower level of cover like 5% or rely on other guarantees like letters of credit or insurance.”

Another leading specialist said: “We try and avoid bonds wherever we can by showing clients that we are financially stable.

“Some firms have been relying on the bond market as a back-up for a bad business leaving the insurance firms to pick up the tab when under bidding came back to bite those contractors on the backside.

“What we will see now is a change in the market as financially stable clients look to work with financially stable contractors and supply chains rather than take a chance on low bids from firms who are surviving hand to mouth.”

Latest news

Wates wins fit-out for Manchester First Street Hub

Smartspace arm secures another Government hub deal
15 hours ago

Big trade names dropped in M Group rebrand

Acquisitive group formed from Morrison Utility services in 2016
13 hours ago

Breyer Group files administration notice

Staff hope rival firm could buy assets and save jobs
18 hours ago

Peel Ports reveals winners for £750m framework

18 firms win places on deal: Full list
16 hours ago

Former Severfield director takes helm at Embrace Steel

New CEO Martin Kelly aims to step up expansion of steelwork contractor
18 hours ago

£302m upgrade funding awarded to FE colleges – list

Cash shared out between England’s 179 college groups
18 hours ago

FK Facades thrives but construction arm hit by ISG row

Dispute with failed contractor costs specialist £5.5m
19 hours ago

Galliford Try gets go-ahead for Milton Keynes PRS tower

33-storey tower needs gateway 2 approval before work can start
2 days ago

Small house builders get £150m funding for green homes

Developers will have to meet-up to ten new criteria to benefit from interest rate discounts
18 hours ago

Lendlease Construction renamed Bovis

US private equity firm completes £35m purchase of UK contracting business and rebrands
2 days ago

Breyer Group battles for survival as rivals circle

Housing maintenance firm fights three winding up petitions in a month
2 days ago

Careys facing £2.4m claim by developer over demolition cartel

Giant Hong Kong developer claims it was overcharged on Lots Road Power Station job
2 days ago

Multiplex profit drops a third as revenue rises to £780m

Spate of new orders sets contractor up for three years of work
2 days ago

Galliford Try and Breheny land latest Sizewell C road deals

More infrastructure deals for new nuclear power station
2 days ago

Worker trapped in collapsed septic tank pit

Contractor and director fined after worker suffers multiple fractures
2 days ago

Homes England buys stalled Broad Marsh site

Demolition to finally be completed as developer hunt begins
2 days ago

Vistry go-ahead for 353 homes at Rochester Riverside

Work to start on next phase of Kent town regeneration at end of this year
3 days ago

M&E firm J S Wright collapsed owing £19m

Trade creditors hit for £11.4m by employee-owned Midlands firm
3 days ago

Right to work checks to be extended to self-employed

Government plans crackdown on illegal working and rogue employers
3 days ago

Midlands developer turns to London with £1bn resi schemes trio

SevenCapital plans 1,000 flats in Kensington, Islington and the Isle of Dogs projects
3 days ago

Deck falls off huge scissor lift at Winvic site

Two men seriously injured as platform plunges to the ground
5 days ago

Weston targets Build to Rent with new division

Weston Partnerships signs first deals with asset managers and councils
3 days ago

Bouygues seals deal for £119m Cardiff college campus

Construction to start in June on two new buildings
5 days ago

£140m cash injection to speed-up flood defence schemes

Funding part of £2.65bn investment over the next two years
3 days ago

Bid race starts for £15bn schools framework refresh

DfE throws framework open to more contractors
6 days ago

Berkeley’s £600m Borough Triangle project approved

Controversial scheme features two towers of 38 and 44-storeys
6 days ago

London Mayor calls in blocked 600-bed student scheme

Refused 20-storey London PBSA block may still be built
6 days ago

HG to build 500-bed London Stratford student scheme

Work will start later this year subject to gateway 2 safety approval
6 days ago

Arrest after pedestrian death on construction site

Tragedy during site preparation works for new Wigan car park
6 days ago

British Steel threatens closure of Scunthorpe blast furnaces

Chinese owners say sectional steel and rail supplies will be maintained
6 days ago

Contractor services