In the case of heavy construction projects and heavy highway projects, the obligee requiring a surety bond is usually a government body, such as a federal, state, or local municipality. The obligee will determine the bond amount, however, a surety company analyzes the risk of the contractor (ability to pay and likelihood of causing a claim) and measures their bonding capacity. Once a surety company bonds a contractor, the obligee knows that they are insured against a loss.

Bid bonds are surety bonds which are used as security on bids submitted on a contract. Bid bonds guarantee that if a contractor is awarded a contract, he or she will execute the contract at the bid price. They also ensure the bid is accurate and that the surety company will write a performance and payment bond if necessary.

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