Performance Bond
Definition
A performance bond is a surety bond that guarantees the satisfactory completion of a construction contract by the contractor. If the contractor fails to complete the works as specified, the surety (typically an insurance company or bank) pays out to the client up to the bond amount, usually 10% of the contract value.
In construction tendering, this means...
Performance bonds are frequently required by clients in higher-risk or larger-value construction contracts. For GCs, understanding the cost of a performance bond (typically 0.5–1.5% of contract value, depending on the contractor's creditworthiness and the project risk profile) is an essential part of tender cost planning.
Related terms
Takshy automates the parts of the tendering process that involve performance bond, extracting scope, managing documents, and keeping your workflow organised from first document to final award.
Automate your tendering with Takshy
Understanding the terminology is step one. Takshy handles the rest, from extracting scope from project documents to sending structured RFQs and managing the returns.
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