What is the best way to include unforeseen change orders in a Payment Bond Contract?
1 reply
May 27, 2020
It’s going to be difficult and likely impossible to include an unknown or an unforeseeable change order amount in a contract with your surety for a bond. Typically those bonds are going to be based on the contract amount. If the contract amount is going to change substantially, especially by change order, your contract with the surety company itself for securing that bond may require you to seek approval from the bond company before such change order is allowed. Or The bond company may require you to come back to them after any change order above a certain amount or certain percentage to explain the amount, and then do a true up in the sense that you have to pay the difference for what the bond amount was originally charged to what it should have been charged based on the change that was implemented. So you kind of need to take a look at what your contract is with the surety to understand what their requirements are going to be for any changes that occur on the project.