For an approved Social Housing Association or Local Authority to enter into an agreement with any developer they require you to enter into a performance bond. A performance bond is to ensure works are going ahead as planned. This bond can be called if you are underperforming. Also known as a contract bond that is issued by a bank or insurance company to guarantee the acceptable completion of a project by the contractor. For example, a developer may be required under the terms of the project, to provide a performance bond in favour of a client for whom the contractor is constructing a building.
If the developer fails to construct the building according to the specifications laid out by the contract (most often due to insolvency of the contractor), the Approved Housing Association or Local Authority are guaranteed compensation for any monetary loss up to the amount of the bond. This money covers any losses incurred. This may include the cost of finding new contractors to complete an unfinished project.
Performance Bonds are mandatory in all government projects, as well as for many private sector projects.
A construction Performance Bond fluctuates between 5% and 15% of the contract value, but this can vary depending on the contractor’s credit and financial history, the size of the project, and other factors. Our experienced team work with Surety providers globally and will ensure the best terms and value for money for your requirements.
Why you require a Performance Bond
- It guarantees satisfactory completion of a project by a contractor
- For the contractor, it is often a prerequisite under the terms of the contract
Beneficiaries of a Performance Bond
- Local authorities
- Government bodies
- Commercial companies
- Main contractor
Information we need from you
Request a performance bond proposal form.
- Two years of consolidated audited accounts.
- Up-to-date management accounts.
- Details of banking and borrowing facilities.
- Details of bonding requirements