Why do Highways ask for a bond to be paid?
Any work done in the Highway is subject to inspections after reinstatement has been completed. The first inspection is generally done when the work is complete, but a final inspection is not done until 2 years later (at the end of the ‘maintenance period’). Sometimes this can be extended to 3 years for a particularly deep connection.
In the event that the work is defective at the end of this maintenance period, for example because the tarmac has sunk, the contractor who carried out the work is legally obliged to rectify the defect.
In recent years, Highways at various County Councils have seen a reduction in the quality of work, in respect of reinstatement in particular. This is often as a result of companies setting up to carry out this type of work, not doing the work to the required standard, and then as the number of defects pile up the company will often dissolve, leaving Highways to pick up the bill. The same people will then set up another company and likely do the same thing again. For this reason, Highways are increasingly asking for a bond to be paid.
How much is the bond normally?
We have known Highways to request bonds as little as £200-£300 for Councils outside of the London area, and for small works on minor roads. However some Councils are asking for bonds upwards of £1,000. For a minor sewer connection in Wimbledon we were recently asked to pay a bond of £1,500, and £5,000 for a major sewer connection in Hendon, these amounts are quite common in the London and surrounding areas. Some councils however, still do not request bonds. And we still find ourselves to be in a fortunate situation with some councils, whereby they do not apply bonds to us, because they know us well and trust our work.
When is the bond returned?
The bond is sometimes returned after the first inspection, which is done immediately after the work is complete. However it is more common for the bond to be returned after 2 years when the following inspection is complete. We have also known instances of 50% of the bond being returned after 1 year, and the remaining 50% after 2 years.
Why does JW Clark Ltd ask the customer to stand the cost of the bond?
As the bulk of our work is sewer connections, we are doing upwards of 50 or 60 sewer connections each year. However we are only a small company, and it is not possible for us to fund this volume of bond payments. Our customers however, most of them reasonably small developers, would only tend to do a handful of developments each year, and a lot of them only 1 or 2 per year. For this reason we consider it to be more manageable for each developer to pay the cost of the bond, and it also enables us to keep our prices more competitive.
Will the customer have to chase Highways for the bond at the end of the maintenance period?
No, at JW Clark Ltd we keep a record of all bond payments, and we diarise chasing the bond in the lead-up to the end of the maintenance period. Our accounts department takes care of this. Of course the customer is welcome to chase Highways as well, if they wish.
Does the customer pay the bond to JW Clark Ltd or straight to Highways?
We will normally ask our customer to pay the bond straight to Highways, to reduce the logistics of the bond being returned at the end of the period. For example if the bond is paid to JW Clark Ltd – and a lot of councils still pay by cheque – we have to deposit this, wait for it to clear, and then make payment back to our customer. However, some customers prefer to pay the bond to JW Clark Ltd and for us to pay it to Highways. Either option is acceptable to us.
What if the work is not passed at the end of the maintenance period and the bond is withheld by Highways?
It has never happened before. JW Clark Ltd have a 100% success rate in bonds being returned at the end of the Maintenance Period. However, we guarantee that in the unlikely event that a bond is withheld by Highways as a result of a defect, we will pay the bond amount to our customer straight away.
What guarantee do I have that JW Clark Ltd will honour all of the above?
JW Clark Ltd are legally obliged to stand by what we promise here. We have been about a long time – incorporated in 2002 – and we plan to be here for many years yet. And if you need any re-assurance that we are a trustworthy company, take a look at our many 5-star reviews on Google here, numbering in excess of 100 at the time of writing. In the event that our customer wants anything more substantial signing, in the form of a legal contract, then we would be more than happy to oblige.
Any more questions on bonds or anything else? Please feel free to ask.
By JWC
