Originally Posted by Stumble
In custom builds this is a pretty common system, even for established builders. The payments are supposed to be for reimbursement of things already done, not prepay,net for the next batch of work.
The best way to insure this type of deal is with a performance bond.
Performance bonds are very common, and almost every construction project
over $1 million it's just assumed.
I worked for Bechtel when I was young. What you say sounds to me more like large construction projects that custom boats. I have followed closely several semi-custom and small-volume boat builds and the payments were ahead of percent complete in situ because builders do not have capital to fund the time between paying suppliers and using the materials. I have not seen a boat builder
provide a performance bond. After all, in most cases the financials are such that any sensible insurer would run away.
Scary but real I am afraid.
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