Who Pays for a Performance Bond?

Performance Bonds are requested as part of the tender process and the cost is built in to the Contract price.

Performance Bonds

ABI Performance Bond / On Demand Bonds, Or a Hybrid Wording, We Can Help!

Do you need a Performance Bond?

Contractual Obligations in the Construction Contract will set out the requirement for a Performance Bond or sometimes referred to as a Construction Guarantee Bond to be provided by the contractor. The Performance Bond is essentialy Guaranteeing the contractors obligations to complete the works and is often put in place prior to the works commencing.

Call now for instant advice and indications on 02476 017646 or use the form opposite and we will contact you straight back.

What Is A Performance Bond?

Performance Bonds / Contract Bonds are a type of Surety Bond and are written promises to pay for direct loss or damage suffered by a third party as a result of a breach of contract and are typically issued for 10% of the contract value.

Performance Bonds are common in construction projects and protect the Employer against the Contractor failing.

How Do Performance Bonds Work?

A Performance Bond is issued in favour of the Employer and provides a fixed amount which can be claimed upon should the Contractor fail.

The Bond is put in place at the start of the Contract and will run until Practical Completion or Making Good of Defects. Once the designated end date has been reached the Bond automatically expires.

Will I Be Able To Obtain a Bond?

The simple answer to this is, Yes, we can supply Bonds to all companies, new and old, we can even issue Bonds for JV's and SPV's. Our wide range of providers allows us to find the best possible solution depending on your circumstances.

How Much Does A Performance Bond Cost?

This question is hard to answer as there are so many variables, but it can be from 1% to 10% of the Bond amount using a fixed rate but some Surety markets quote per annum too. Our team can give you an instant indication over the phone for any tenders enabling you to price these competitively and quickly.

Call now for instant advice and indications on 02476 017646 or use the form opposite and we will contact you straight back.

Will I Need To Provide Additional Security?

All Bonds, without exception, ask for some level of security or collateral from the applicant. This is a minimum of a Company Indemnity but can be higher depending on the Bond amount and other underwriting factors. However we will always aim to get you the best option with the lowest security and avoiding Personal Guarantees or Cash Deposits where possible.

ABI Performance Bond

The most common type of Performance Bond we are asked to issue is an ABI Performance Bond, this is the standard form of Bond and is found in JCT Contracts. This type of Construction Performance Bond is tried and tested, it is fair to all parties and pays upon quantified losses.

On Demand Performance Bonds

On Demand Performance Bonds, as the name suggests pays On Demand from the Employer and typically the Surety has only 5 working days, or less, to settle any claim. While we do place these Bonds regularly it is important that the Contractor is aware of the nature of this type of Bond as any Collateral given could be enforced if the Surety is Demanded to pay the Employer.

Other Types Of Construction Bonds

Construction Performance Bond wordings can be altered by Solicitors which then form Conditional Performance Bonds in many variants to the standard ABI Performance Bond and we can support any type of wording required including, On Demand variants, Adjudication Wordings and any Hybrid Wording for both JCT and NEC Contract requirements. If you are unsure on the wording we will advise you and provide support in understanding your obligations. In addition some other bonds such as Bid Bonds could be requested but are less used in the UK.

Benefits Of A Performance Bond.

Often the requirement to provide a Performance Bond is contractual and requested as part of the tender process. However, some contractors offer them on all projects as a way to stand out over their competitors. Having the backing of a Surety provider gives confidence to the Employer that the contract will be completed or if not that there is some recourse available to them should the Contractor fail.

Why Use Surety Bonds & Guarantees?

The UK Surety market is complex and a specialist broker with knowledge and expertise to help guide you throught the process is essential. As a leading provider of All Surety Bonds in the UK, we are able to Bond any size contract and consider any type of wording. We have access to exclusive markets and work for you to obtain the best terms with the lowest security.

We pride ourselves on our ability to offer:

Competitive Premiums
Fast and Simple Process
Access to the most Providers
All Wordings Covered (ABI, On-demand, Adjudication or hybrid)
Exclusive Markets unavailable to other brokers
Specialist knowledge of the surety market

Call now for instant advice and indications on 02476 017646 or use the form opposite and we will contact you straight back.

How can SB&G help?

We can help any contractor obtain the Performance Bond they need!

The placement of Performance Bonds through the use of surety markets (Insurance Companies), as alternatives to bank guarantees, can help companies by keeping bank facilities available to meet cash flow requirements while meeting their contractual obligations. We provide bonds for Main Contractors and Sub Contractors and our team can even provide an indication of costs based upon your requirements using our Performance Bond Calculator.