What does a Performance Bond guarantee?

A performance bond guarantees that jobs will be completed as required, ensuring that a contractor fulfills their contractual obligations to the owner of a project. This bond serves as a financial guarantee that the work will be finished according to the terms and specifications outlined in the contract. If the contractor fails to complete the job or does so inadequately, the owner can make a claim against the bond to recover any losses incurred due to the contractor's non-performance.

This is particularly important in construction projects, where substantial resources are invested, and timely completion is critical. The assurance provided by a performance bond helps to mitigate risks associated with contractor performance and protects the interests of the project owner.