For you to receive a performance bond, the bonding agent will:
1) Look over you and your company's project completion and performance
history with a fine-toothed comb,
2) Make a financial assessment of the maximum and probably risks that
could possibly be associated with the venture, and
3) Determine if they want to bond the venture or not (you're never
guaranteed to obtain a bond), and if so for how much considering the risk.
If they DO offer you a bond, it will be very, very expensive. Tell your
client to buy it themselves, if your company can be bonded. This should
never be your cost or burden in any way.
One caution, though: it's been my experience that clients who approach
projects like this are usually not very good ones to work with. Sure, they
want to protect their investment, but these systems are _constantly_
changing and require continuous maintenance as business conditions change.
This being the case, where are the boundaries of coverage of your
performance bond?
Also, large systems are typically built in part by multiple developers.
Where are the boundaries of your performance bond with respect to this?
It's not a cut-and-dried proposition even if you can obtain a bond. You
may suggest to your client that he contact his business insurance agent
about specialized coverage for major system loss, damage, and errors. They
may even be able to cover your work on the project with E&O (Errors and
Omissions) insurance, but this, too, is expensive.
Best of luck, my friend.
At 09:53 AM 7/27/00 -0400, you wrote:
>I have a new client where I will be creating a new system for them. The
>project is expected to take 12 to 14 months and will be a big financial
>investment for them. The client would like to require my company to obtain a
>performance bond to protect their investment.
>
>I've never heard of a performance bond used in a situation like this. I
>would think that even if available a performance bond would be very
>expensive. I am not sure what concerns they have that a bond could address.
>I guess they are concerned about my partner and I dying or otherwise being
>unable to complete the project. I don't think they would raise such concerns
>if we were a bigger company.
>
>Has anyone run into a client with similar concerns or have experience with
>performance bonds? What is the best way to handle this?
>
>Thanks,
>
>Chris
>
>-------------------------------------------
>Christopher P. Maher
>Maher Associates, Inc.
>Actuarial and Computer Consulting
>http://www.maherassociates.com
>mailto:[EMAIL PROTECTED]
>
>
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Respectfully,
Adam Phillip Churvis
President
Productivity Enhancement, Inc.
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