A Performance Bond is a formal document that confirms the surety's obligation to make a payment towards the owner of a construction project in case the contractor hired to work on the project failed to comply with their responsibilities outlined in the construction contract. If the contractor is unable to finish the project or delays the schedule set in writing, the customer can launch a claim against them and demand compensation for money or time lost.
Whether you work in a private or public sector, a document of this kind will protect your reputation, build a good working relationship with the customer who will choose you for other projects in the future, and confirm your trustworthiness to the financial institution if no claims are made on your bond. It helps the construction company to establish themselves as a respectable business and ensures the client can enter into any agreements with them without massive financial risks.
A Performance Bond template can be downloaded below. Note that if you represent a government entity or you offer your construction experience to public institutions, it is necessary to fill out an alternative form - GSA Standard Form 25, Performance Bond.
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