HENDERSON Insurance Brokers has backed the region’s construction industry by arranging performance bonds that have guaranteed £500m worth of contracts in Yorkshire and the North-East this year.
The figure represents a 10 per cent increase on 2011 and the Stockton-based firm's projected numbers for the year ahead show a steady rise.
Performance bonds are commonly used in the construction industry, where an owner or funder may require the developer to ensure that contractors or project managers procure bonds to guarantee that the value of the work will not be lost in the case of an unforseen event such as the insolvency of the contractor. They are particularly useful for investors and contractors in challenging economic times when a formal guarantee is required to ensure that the job is completed.
Trevor Jones, managing director of Henderson Surety Services (HSS), said: “Access to good value performance bonds gives local firms the security they need to convince developers and end users that their projects can now be completed in the event of the contractor suffering financial problems. Performance bonds are arranged on a bespoke basis for individual projects but we expect market conditions to continue to be challenging during the next 12 months. It is, therefore, important that both owners or funders and their contractors review their current arrangements to ensure that they are best placed to meet the challenges ahead.”
He added: “Construction is a key growth area powering the regional economy, and any financial instruments provided by local firms like HIBL are a welcome boost to the confidence the sector needs to succeed in a challenging economic climate. Bonds can drive the construction industry by giving decision makers the confidence they need to embark on projects and get Yorkshire building again.”