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How does a 5% bid bond work?

The 5% bid bond is the bid bond amount as a percentage of the contractors bid amount. However, this percentage can vary between projects but its commonly around 5-10% of the total cost. A $100,000 construction contract will need a $5,000 bond if its a 5% bid bond requirement.

What is the typical value of a bid bond?

Youll likely need to get a bid surety bond thats a specific percentage of the total estimated contract amount (most commonly about 5-10% of the total contract cost). This means if the project youre bidding on is estimated to cost $500,000 and youre required to get a 10% bid bond, you need to get a $50,000 bid bond.

How much does a $500,000 surety bond cost?

Surety bond premiums are calculated as a small percentage of the bond amount. $500,000 surety bonds typically cost 0.510% of the bond amount, or $2,500$50,000..

What is the bid bond clause?

Key Features of a Contractor Bid Bond The bond guarantees the contractor will enter into the contract if they are awarded the bid. The bond guarantees the contractor will provide the required performance and payment bonds. The size of the bond is typically 5% to 10% of the bid price.