21 July 2025
Construction bonds: more than a formality
In construction and large-scale projects, bonds are far more than just paperwork — they’re powerful tools that provide financial assurance, build trust, and open the door to new opportunities.
Whether you’re a contractor submitting a tender, or a developer seeking protection for your upfront investment, choosing the right bond can be a game-changer.
From Bid Bonds to Retention Bonds, each type plays a different role in protecting timelines, budgets, and client trust. Here are the 5 essentials every construction business should know.
1. Bid Bonds
These bonds serve as a financial guarantee that the contractor’s bid is both credible and capable of being fulfilled. If the contractor withdraws after being awarded the contract, the bond allows the client to recover associated costs. Bid bonds are deal for the tender stage, as they help demonstrate reliability and strengthen trust from the outset.
2. Performance Bonds
Issued after the contract is awarded, performance bonds ensure that the contractor will complete the project according to the agreed specifications, quality standards, and timeline. They provide a valuable safety net for developers and project owners, offering reassurance throughout the delivery stage.
3. Advance Payment Bonds
When clients make upfront payments for mobilisation or materials, advance payment bonds safeguard those funds. If the contractor fails to deliver, the bond provides reimbursement — making it a crucial tool for projects that require early-stage funding.
4. Retention Bonds
These allow retention monies to be released early while still protecting the client against defects or incomplete work. Retention bonds are a valuable tool for improving cash flow without sacrificing peace of mind.
5. Customs, Excise & Movement Guarantees
Commonly used in the transport of goods or equipment, these bonds allow businesses to defer taxes or duties. Customs, excise and movement guarantees are especially valuable in cross-border infrastructure projects, helping manage tax liabilities and logistics.
The Verlingue Approach
At Verlingue, we work consultatively with clients to identify the right bonding structure for each unique project. We understand that no two sites—or businesses—are the same.
Our sector knowledge and access to a wide panel of surety providers mean we’re able to offer fast, competitive, and tailored solutions. Whether you’re just starting a new build or reviewing your bonding strategy, we’re here to help you build with confidence.
As with most insurance products, bonds are subject to underwriting criteria, terms, conditions, and fees. Please contact us to discuss your specific requirements.
