News

Construction figures released in July 2025 showed a mixed picture, with monthly output falling in May but activity remaining higher over the latest three-month period.

Office for National Statistics data published on 11 July showed that monthly construction output fell by 0.6% in May 2025. The decrease came from a 2.1% fall in repair and maintenance, while new work increased by 0.6%.*

Over the three months to May, however, total construction output increased by 1.2%. New work rose by 0.9% and repair and maintenance by 1.5%.*

The Insolvency Service subsequently reported 2,043 registered company insolvencies in England and Wales during June 2025. This was 8% lower than May and 16% lower than June 2024, although insolvency levels remained elevated compared with longer-term historic norms.**

For contractors and developers managing a steady pipeline of projects, these conditions reinforce the importance of planning surety requirements across the whole programme rather than treating every bond as a completely separate transaction.

Repeat Bond Requirements Can Build Quickly

A business undertaking several contracts may require bonds across different projects at the same time.

Those requirements may include:

• Performance Bonds;
• Advance Payment Bonds;
• Retention Bonds;
• Section Bonds;
• Materials Bonds; and
• other contractual guarantees.

Each individual requirement may appear manageable, but the combined exposure can become significant.

What Is a Surety Bond Facility?

A surety bond facility is an agreed framework under which a surety is prepared to consider repeat bond requirements for a business.

Depending on the arrangement, the facility may set parameters around:

• maximum individual bond values;
• overall aggregate exposure;
• acceptable bond types;
• financial information requirements;
• ongoing review requirements; and
• the type of contracts or beneficiaries that may be considered.

A facility does not necessarily mean that every future bond will be issued automatically, but it can create a clearer structure for repeat requirements.

Aggregate Exposure Is Important

Surety providers usually consider both the size of an individual bond and the total amount of exposure already outstanding.

A contractor with several live bonds may therefore have less available headroom than another business with similar financial strength but fewer existing commitments.

Our Bond Capacity Explained guide looks in more detail at individual limits, aggregate exposure and available headroom.

A Growing Pipeline Can Change Capacity Requirements

As a contractor wins additional work, expected bond requirements can increase before existing bonds have been released.

This can be particularly relevant where:

• several projects overlap;
• contracts run for long periods;
• bond release depends on formal certification;
• new tenders require security before old obligations expire; or
• the business is moving into larger contracts.

Our Contract Growth & Surety Capacity guide explains how an expanding order book can affect future bonding requirements.

Facilities Can Help Businesses Plan Ahead

Where repeat bond requirements are expected, it can be useful to understand likely capacity before the next contract is awarded.

This allows the business to consider:

• how much exposure is currently outstanding;
• what bonds may be released soon;
• what new contracts are expected;
• the likely value of future bond requirements; and
• whether additional surety markets may be needed.

That planning can be particularly important for contractors tendering for several bonded contracts at the same time.

Existing Bonds Should Be Reviewed Regularly

One of the simplest ways to protect available capacity is to ensure bonds that are no longer required are formally reduced or released where the underlying agreement allows.

A completed project does not always result in the bond automatically disappearing from the surety's exposure records.

Formal evidence may be required from the beneficiary before the surety can treat the obligation as discharged.

Keeping an accurate schedule of live bonds can therefore help identify exposure that may be capable of reduction or release.

Financial Performance Still Determines Capacity

A facility is not a substitute for financial strength.

Surety providers may continue to review:

• statutory accounts;
• management accounts;
• working capital;
• cash flow;
• profitability;
• work in progress;
• existing debt;
• the order book; and
• existing surety exposure.

Our Surety Underwriting guide explains how these factors may affect the assessment.

Facilities Can Evolve as the Business Changes

The level of capacity appropriate for a business today may not be sufficient in a year's time.

If turnover, contract sizes or the number of projects increases, the facility may need to be reviewed.

Equally, stronger financial results or the successful completion of larger contracts can potentially support discussions around increased capacity.

The reverse can also apply where financial performance deteriorates or exposure rises more quickly than anticipated.

More Than One Surety Market May Be Appropriate

Some contractors rely on a single surety provider, while others may use more than one market depending on the scale and variety of their requirements.

Different sureties can have different appetites for:

• contract size;
• bond wording;
• sector exposure;
• financial profiles;
• SPVs and group structures; and
• particular types of bond.

Access to a wider surety market can therefore be useful where requirements fall outside one provider's normal appetite.

Current Information Helps With Repeat Applications

Maintaining up-to-date financial and project information can make repeat bond applications easier to assess.

This may include:

• latest management accounts;
• current work-in-progress schedules;
• a schedule of live bonds;
• details of upcoming contracts;
• the forward order book; and
• information about any significant changes to the business.

Our Surety Bond Information Required guide explains the documentation that may be requested.

Planning Capacity Can Reduce Last-Minute Pressure

The July construction data showed that monthly activity can move quickly even when the wider project pipeline remains active.

For contractors with recurring bond requirements, the most useful question is often not simply whether a bond can be obtained today, but whether sufficient capacity will remain available for the next project as well.

A structured surety facility can help provide that wider view and allow bond requirements to be planned alongside the business's expected workload.