QScope

Bonds

Bonds, policies and warranties

Security expires quietly. A performance bond that lapsed before practical completion and a collateral warranty nobody executed are both discovered at the same moment: the one you needed them.

QScope Team·3 min read

One line per instrument

  1. Open Bonds and Warranties and add a record.
  2. Choose the type: performance bond, advance payment bond, off-site materials bond, retention bond, parent company guarantee, collateral warranty or one of the project insurances.
  3. Record who gave it, the provider, the reference and the amount or limit.
  4. Enter the expiry date.
Store the executed document in the project files area. The register holds the dates and the status, which are the parts that need watching.

Expiry is the whole point

End dates are set when the programme looks different from how it turns out. When a job runs long, the security runs out before the obligation it secures has been discharged.

Anything expiring within sixty days is flagged, and anything already expired shows in red. Sixty days rather than thirty because a bond extension needs a request, an underwriting decision and an execution, and that rarely happens in a fortnight.

Requested is not in place

The commonest gap is not an expiry at all. It is a bond that was asked for at contract stage, chased twice, and never arrived. Nobody notices, because there is no document to file and therefore nothing missing from the file.

  1. Use the status field honestly: in place, requested, draft, not required or expired.
  2. The summary counts requested and draft separately from in place.
That count is the number worth looking at before practical completion. Obligations nobody can enforce are worth knowing about while there is still leverage to fix them.

FIDIC calls them the Performance Security and the advance payment guarantee

On a FIDIC job the two main instruments are the Performance Security under Sub-Clause 4.2 and, where an advance is paid, the advance payment guarantee under Sub-Clause 14.2. On Gulf and FIDIC contracts these are the standard security, and they are recorded the same way as their UK equivalents.

  1. Add the Performance Security as a record and enter its expiry, which has to outlast the Defects Notification Period.
  2. Add the advance payment guarantee and read it against the advance still to recover.
Percentages and durations come from the Contract Data and the Particular Conditions. The register holds the dates and the status; verify the figures against the contract.

Keep reading

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