How should an RME handle performance bonds and surety requirements?

• A. Avoid bonds to minimize paperwork.
• B. Ensure compliance, coordinate with the owner and contractor on bond requirements, and maintain documentation.
• C. Increase bond amount beyond requirement without justification.
• D. Rely solely on the owner's assurances; no documentation.

Answer: (B)

When handling performance bonds and surety requirements, the key practice is to ensure compliance with all contract requirements, work closely with both the owner and the contractor to confirm bond specifics, and keep comprehensive records. Performance bonds are there to guarantee that the contractor will complete the project as specified; if the contractor cannot fulfill the obligation, the surety company steps in to either finish the work or compensate for the shortfall. Because of that, getting bond terms right is critical: verify the correct type and amount, check that the bond forms meet the contract and statutory requirements, confirm expiration dates and any renewals, and ensure the surety is reputable and properly licensed.

Coordinating with the owner and contractor helps align everyone on what the bond covers, when it applies, and how claims would be handled. Maintaining documentation creates a solid audit trail—bond numbers, limits, expiration dates, surety contact, any amendments, and related lien waivers or releases. This readiness reduces delays, clarifies responsibilities, and protects the project from financial risk.

Avoiding bonds altogether ignores a fundamental protection built into most construction contracts and can lead to noncompliance and exposure if a performance issue arises. Increasing the bond amount beyond what the contract requires, without justification, adds unnecessary cost and may complicate procurement or future claims. Relying on the owner’s assurances without documentation creates ambiguity and risk if disputes occur.