At the end of the day Alton a bond costs a percent of the job. I think 10% was what I paid. That particular bond promised to pay the difference between my contract price and a price charged by someone else if I was un able or unwilling to complete the project. Curiously due to extras, the final price paid to my company was about double the contract price as plans were typically incomplete (a fact I cautioned the client about but was told to "bid the print").
Extras, changes, re-dos etc. are not covered by the bond, so my contract price was earned before the project was half over. The insurance company would not have paid a cent if I had walked.

People typically pay more for their cars than my geo systems (which often last longer than their cars) and seldom ask for performance bonds (and seldom see advertised performance met). Iwonder why we don't bat an eye over that.......
It is easy to ponder the question in light of Madcow's experience, but are you prepared to add 1 or 2 grand to all of your customers' heating installation cost whether they need it or not? Are the builders asked to provide a bond (sometimes yes in my AO)? Or the plumbers who's fixture packages often exceed the price of the heating system? How 'bout the M.E. on the problem I mentioned above for grossly under designing the ventilation and other requirements suprising the building owner with thousands of unbudgeted expense or the archetect guilty of the same shortcommings (that 200k project ran 100k over budget!)?
Where do we stop?
Maybe a better choice is to be a good student of the homeowners recourse in a given state. In MI that is the construction lien fund. If adhered to a consumer has recourse yet virtually none (unless prompted by a lender or builder) ask for a waiver of lien when they pay. Doesn't matter in my case- I'm one of the good guys.
If they have something similar in your state, your clients could demonstrate money paid vs goods delivered and put real heat on crooked contractors while getting relief from undue expense. That beats trying to pry money out of an insurance company and paying a hefty premium.

but are you prepared to add 1 or 2 grand to all of your customers' heating installation cost whether they need it or not?

If the contractor was bonded, the cost would probably be less than a thousand and that would be spread over all the jobs done that year. If the bond was not accessed, that's great. However, if it was attached....

Posted By ICFHybrid on 30 Aug 2012 10:37 AM

but are you prepared to add 1 or 2 grand to all of your customers' heating installation cost whether they need it or not?

If the contractor was bonded, the cost would probably be less than a thousand and that would be spread over all the jobs done that year. If the bond was not accessed, that's great. However, if it was attached....

Quick review:

"Since geothermal costs are significant, should a homeowner insist on a bond?   What percent would be added for a bond that covered installation?   How should the bond be worded to protect a homeowner.   Should the bond be only for completing installation?   Should the bond include a guarantee that the energy bill will not exceed a maximum as measured in kilowatt hours for the first two years?"

The topic is performance (surety) bonds which most know is paid per job.

Being "bonded" is an annual fee and vettes employees, or examines a companies finances. It offers customers some protection.

Similar but different.
 
If they were synonyms you would only have to be bonded once a year to do multiple government jobs.

Bonded companies are seldom the lowest bidder everyone covets (which is why they have good financials).

Glad to help.
j

Before you can even consider a bond, one has to define "works right". The typical installer can't even measure COP and unusual weather, unexpected soil conductivity, abnormal usage patterns, etc will all be used as reasons why even a failure to heat/cool isn't their problem.

Posted By jonr on 31 Aug 2012 04:13 PM
Before you can even consider a bond, one has to define "works right". The typical installer can't even measure COP and unusual weather, unexpected soil conductivity, abnormal usage patterns, etc will all be used as reasons why even a failure to heat/cool isn't their problem.

Unusual weather and abnormal usage patterns are reasons predicted performance might not be met, so yeah they would be brought up if someone claimed I didn't deliver.
This year record high temps combined with drought gave a large system of mine with pond loops hell, and caused extremely high EWTs locking out equipment. The only way I was able to cool the home was to temporarily switch some of the units to open loop.

"Unexpected soil conductivity" is hard to imagine when your the one digging it (ergo you know the soil). In extreme drought, damp soil turned dry is the only possible "unexpected" soil behavior and yes that would be a mitigating condition I should think.

 

Wondering what happened to Alton. He asked the question, what are his thoughts?

Posted By geodean on 01 Sep 2012 01:07 PM
Wondering what happened to Alton. He asked the question, what are his thoughts?

I think that Water Furnace makes a very good product.  Over the years, several of my clients, with my encouragement, now have geothermal units installed.  Most have installed Water Furnace. 

I do wish that the homeowner had more recourse when their local dealer fails to correct problems.  In Alabama, the state licensing board has intervened to force some dealers to correct problems.  In some cases that I am familiar with, the state said to either fix the problem or the dealer/installer license would be revoked.  I understand that some of the other southeastern states are not interested in getting involved.  If so, then about the only recourse the homeowner has is to sue the dealer/installer.  My thinking is that there should be a better and faster way to solve installer or manufacturer's defects.  That is why I asked about bonding geothermal installers.  If bonding does not appear to be the answer, then maybe a portion of the funds paid for a license should be used to protect the homeowner.  But that means that each state would have to pass the laws to require a fund.  I do not know what can be done but I think something should be done since the cost for geothermal is significant.  It appears to me that the homeowner is assuming almost all of the risk since most dealers/installers that I have dealt with want a large down payment before the unit is ordered.

I would like to take this opportunity to thank all of the dealer/installers that I have worked with that did a great job.  Lee Lambert in Florence, Alabama is the most recent outstanding dealer/installer that I have had the pleasure to work with.

Again education and legislation state by state would appear to be the best fix. Apparently your home state already protects it's consumers with a system like ours in MI. According to ICF bonds are required on all projects in his state.

My concern is that we give shoppers ere the impression that a bond (and associated cost) is the only way to protect themselves. In many cases it may do the opposite by alienating many contractors who shie from folks that ask for atypical expenditures on a job. Those contractors who do not shie away may be those desperate for work (generally not the best at their craft).

On retrofits I do 50% down, 50% upon completion (defined as passing city / county final inspection)

On new construction I do 40% down, 40% rough inspection, 20% final inspection.

My understanding is that if I abscond with someone's money and they file a complaint with the state, my license is in jeopardy - pretty good consumer protection, I think.

I would have to be really attracted / motivated by a project (large and profitable) to undertake the time, risk and expense of bonding.

If I sense a customer is likely to pose particular difficulty by their unique circumstances or personal disposition, I'll take a pass. Let someone else die taking that hill (that policy statement shamelessly taken from Joe and adopted as my own). Most seasoned (in other words, still alive and kicking after the last several years in this economy) have some sort of mechanism, formal or informal, for assessing risk and winnowing out unfavorable prospects. Some clients are simply better suited to be served by one's competitors. True genius lies in identifying them early enough steer well clear.