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What type of down payment guarantees can be requested while contracting a subcontractor for small considerable amounts of down payments..?
The down payment is normally required as mobilization advance in medium to large size contracts. The safest form of guarantee is one from a commercial bank of repute. However, some organizations also accept such guarantees from reputed insurance companies. One more thing that the validity of any such guarantee must be till complete adjustment of advance money from progressive payments being made to the contractor or finalization of the contract if no adjustment during course of the project is to be made.
In most of the big project or construction contract, initial mobilization cost is quite high, may around “25%” of the total project cost. In such a case, the contractor may request for initial advance or down payment of mobilization cost against a Bank guarantee. The Bank guarantee is issued by a scheduled Bank with a definite validity period and the supplier submit it to the Purchaser. Then, the purchaser pay the advance amount as mentioned in the contract to the supplier. The “BANK GUARANTEE” as explained above is called “down payment guarantee
Are you referring to Advance Payment Bonds?
