The performance bonds for construction projects are financial assurance or guarantee that the projects will complete as at the time agreed upon. Performance bond is usually given to the main contractor who is represented as the principal in the agreement or bond. The project owner is represented as the Oblige who has awarded the project or the job to the principal to execute it.
The project owner in this context could be;
1. The government.
2. The constituted authority and municipality.
3. Private project owners
Every project bid will have to include the price to complete the project. It will also make mention of level of standard of the project while also include time frame to take complete the job. Most performance bonds for construction projects will assure the project owners that all agreed terms will be followed in completing them.
Where you as the principal default for one reason or the other and could not complete the project for whatever circumstance, the performance bond can be converted to funds which can be used to cover up the loss incurred from the project. It is the principal that will be responsible for the insurer, the surety and the loss of the project.
It is imperative to note that the performance bond will only come after the bid bond. What this means is that before you can have performance bond for a particular job or project, you must have been awarded the project. It is only when your bid value happens to be low but high in contents that you will be assured of getting the job. And that is when you can get performance bond.
The cost of most performance bonds for construction projects is about one percent of the total value of the project. And the awardee of the bond will have to review the financials of your company as well as the past jobs and projects you have executed. The details of the jobs to collect the performance bond for will also be reviewed. To get more information visit #https://www.constructionbond.ca/performance-bonds-for-construction-projects/.
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