UK Performance Bond Specialists
Performance Bonds for Contractors & Construction Projects
SB&G arranges UK Performance Bonds for contractors, subcontractors, developers and commercial businesses. We work across a broad surety market and can consider ABI, conditional, on-demand and bespoke bond wording, including requirements under JCT and NEC contracts.
Specialist UK Surety Broker
Broad Surety Market Access
New Companies & SPVs Considered
ABI, Conditional & On-Demand Wording
Need a Performance Bond? Complete the enquiry form alongside this page with the contract value, bond amount and required date, and the SB&G team can review the requirement.
Performance Bonds UK
What Is a Performance Bond?
A Performance Bond is a type of surety bond used to support a contractor's obligations under a construction or commercial contract. The bond is issued in favour of the employer or other beneficiary and provides financial protection if the circumstances for a valid claim arise under the bond wording.
Performance Bonds are commonly required under construction contracts, including JCT and NEC arrangements, and are frequently requested as part of the tender or contract-award process.
A bond amount of around 10% of the underlying contract value is common in UK construction, although the required percentage, wording and duration depend on the individual contract.
At a Glance
How Do Performance Bonds Work?
The Contractor
The contractor or principal is the party whose contractual obligations are being supported by the bond.
The Beneficiary
The employer or other beneficiary receives the protection provided by the bond.
The Surety
The surety issues the bond and assumes the obligation described in the agreed wording.
The Bond Period
The bond normally runs for the period defined in the document, often linked to Practical Completion, Making Good of Defects or another agreed release point.
Eligibility
Can My Company Obtain a Performance Bond?
Potentially. Surety underwriting is case-specific, and SB&G can consider established contractors as well as more complex applicants where suitable market appetite is available.
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Established contractors
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SPVs and joint ventures
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Businesses with recent trading losses
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Companies with unusual financial structures
Performance Bond Cost
How Much Does a Performance Bond Cost?
Performance Bond pricing varies because no two contractors or bond requirements present exactly the same risk.
Premiums may be quoted as a percentage of the bond amount, on a flat or annual basis, and some surety markets apply minimum premiums. The applicant's financial position, bond value, contract duration, wording and security structure can all affect the final price.
For tender purposes, SB&G can often provide an early indication once the basic contract value, required bond amount and applicant details are known.
Bond Wording
ABI, Conditional & On-Demand Performance Bonds
The wording defines the obligation the surety is being asked to issue and can materially affect underwriting, pricing and market appetite.
ABI Performance Bonds
ABI-style wording is widely used in UK construction and is generally associated with a conditional form of Performance Bond.
Conditional Bonds
Liability is linked to the conditions and claim mechanism set out in the bond wording.
On-Demand Bonds
Demand-based wording can create a different risk profile and may require a different surety market or security structure.
Bespoke Wordings
SB&G can consider amended, adjudication, hybrid and other bespoke wording subject to surety-market acceptance.
Indemnity & Security
Will I Need to Provide Additional Security?
Surety security varies according to the applicant, bond exposure and market involved. A corporate indemnity is commonly part of the surety arrangement, while additional support may be requested in some cases.
Additional support can potentially include parent-company backing, personal guarantees or cash collateral, but these are not automatically required in every case.
Why SB&G?
Specialist Performance Bond Market Access
The UK surety market is not one single underwriting market. Different providers can take different views on financial strength, bond wording, security and contract exposure.
Broad Market Access
Access to a broad range of surety providers allows different underwriting approaches to be considered.
Difficult Placements
Non-standard financials, SPVs, unusual wording and previously declined requirements can potentially be reviewed.
Specialist Wording Knowledge
ABI, conditional, on-demand, adjudication and bespoke wording can be considered across the available market.
Commercial Approach
SB&G aims to find appropriate terms, pricing and security for the individual contract and applicant.
Surety Market
Why Use a Surety Performance Bond?
Performance Bonds arranged through specialist surety markets can provide an alternative to using a bank guarantee or tying the requirement directly to existing banking facilities.
This can help contractors preserve banking capacity and working-capital flexibility while still satisfying contractual bond requirements.
The appropriate structure depends on the contractor, contract and available surety-market terms.
Tight Deadline?
Need a Performance Bond Urgently?
Straightforward Performance Bond requirements can sometimes progress quickly where complete financial information, contract details and bond wording are available from the outset.
Complex financials, bespoke wording or large exposures can require additional underwriting, so the exact deadline should be identified at the start.
Watch
What Is a Performance Bond?
Performance Bond Questions
Frequently Asked Questions
Do I need a Performance Bond?
The requirement will normally be set out in the construction contract, tender or employer's requirements. Performance Bonds are commonly used where the employer requires additional security for the contractor's contractual performance.
How much is a Performance Bond usually for?
A bond amount of around 10% of the underlying contract value is common in UK construction, although other percentages may be required depending on the contract.
How much does a Performance Bond cost?
Pricing varies according to the applicant, bond amount, duration, wording, financial position and surety market. Minimum premiums may also apply.
Can a new company obtain a Performance Bond?
Potentially. New companies and SPVs can sometimes be supported where funding, management experience, group strength and the underlying contract provide an acceptable underwriting case.
Can a company with weak financials obtain a Performance Bond?
Potentially. Negative net assets or recent losses do not automatically mean every surety market will decline the requirement. Current trading, liquidity, support and contract exposure may also be relevant.
What is an ABI Performance Bond?
ABI-style wording is widely used within UK construction and is generally associated with a conditional Performance Bond structure. The actual wording should always be reviewed, particularly if amendments have been made.
Can SB&G arrange an on-demand Performance Bond?
Potentially. On-demand wording creates a different risk profile and market appetite varies, so the proposed form should be supplied for review.
Will I need a personal guarantee?
Not automatically. Security requirements vary by case and market. Many arrangements can be supported through corporate indemnity, while additional support may be requested in some circumstances.
How long does a Performance Bond take?
There is no universal turnaround time. Straightforward applications with complete information can move quickly, while more complex cases can require additional underwriting and documentation.
When does a Performance Bond expire?
The expiry or release mechanism depends on the wording. It may be linked to Practical Completion, Making Good of Defects or another agreed date or contractual milestone.
Specialist Guidance
Performance Bond Guidance
Surety Underwriting
How sureties assess financial strength, contracts, exposure and risk.
Read the guide ›
Conditional vs On-Demand Bonds
Understand how the bond wording changes the surety's obligation.
Read the guide ›
Bond Security
Corporate indemnities, personal guarantees, parent support and collateral.
Read the guide ›
Urgent Bond Requirements
What information helps a time-sensitive bond progress efficiently.
Read the guide ›
How Long Does a Surety Bond Take?
Understand the process from initial submission through to final issue.
Read the guide ›
Bond Capacity Explained
Single-bond limits, aggregate exposure and available headroom.
Read the guide ›
Ready to arrange the Performance Bond? Use the Performance Bond enquiry form alongside this page or call 02476 017646 to discuss the requirement with a specialist surety broker.
Performance Bond availability, premium, security, wording and underwriting requirements vary between applicants and surety providers. The information above is general guidance and should not be treated as legal advice on the effect of any particular bond wording.