What do performance bonds guarantee?

What do performance bonds guarantee?

• A. They guarantee that the project will be completed on time.
• B. They guarantee payment to subcontractors.
• C. They guarantee that the contractor will perform to the contract terms and that the project will be built per plans and specifications.
• D. They guarantee the owner will approve changes.

Answer: (C)

Performance bonds are about ensuring the contractor fulfills the contract and builds the project according to the plans and specifications. They create a three‑party guarantee among the owner, the contractor, and a surety. If the contractor fails to perform as required, the owner can make a claim on the bond, and the surety will either arrange for another qualified contractor to complete the work or compensate the owner up to the bond amount. This protection focuses on delivering the project per the contract documents, not on scheduling, payments to subs, or owner change approvals.

Performance bonds are about ensuring the contractor fulfills the contract and builds the project according to the plans and specifications. They create a three‑party guarantee among the owner, the contractor, and a surety. If the contractor fails to perform as required, the owner can make a claim on the bond, and the surety will either arrange for another qualified contractor to complete the work or compensate the owner up to the bond amount. This protection focuses on delivering the project per the contract documents, not on scheduling, payments to subs, or owner change approvals.