YORKSHIRE-based Henderson Insurance Brokers has provided a shot in the arm for the region’s construction industry by arranging performance bonds that have guaranteed £500m worth of contracts in Yorkshire and the North East of England this year.
According to Henderson, the figure represents a 10 per cent increase on last year, and projected figures for next year show a further “steady rise” in demand for performance bonds.
Performance bonds are often used in the construction industry. An owner or funder may require the developer to ensure that contractors or project managers procure bonds in order to guarantee that the value of the work will not be lost if something goes wrong, such as the contractor becoming insolvent.
They are particularly useful for investors and contractors in challenging economic times when a formal guarantee is required to ensure that the job is com- pleted.
Trevor Jones, the 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 decisionmakers the confidence they need to embark on projects and get Yorkshire building again.”
Leeds-based Henderson Insurance Brokers’ division Henderson Surety Services (HSS) is one of the UK’s biggest specialist providers of construction bonds.