What is the main purpose of a bid bond?

A bid bond serves as a financial guarantee that a bidder will enter into a contract under the terms proposed in their bid if they are awarded the contract. This is crucial in the bidding process because it protects the project owner from having to restart the bidding process if the winning bidder refuses to honour their bid. By requiring a bid bond, the owner ensures that the bidder is serious about their proposal and is committed to proceeding if selected.

In the broader context of the construction industry, bid bonds help maintain the integrity of the bidding process, fostering competitive bidding while also providing assurance that the project will move forward as planned. This mechanism ultimately allows project owners to choose from multiple proposals with confidence, knowing that the bidders have a vested interest in following through.