1. Name: Wafa Nasser Sulaiman AL-Mahrouqi Id: 08982531 Project management
Performance bond
Name: Wafa Nasser Sulaiman AL-Mahrouqi
Id:
Project management

2. A performance bond
is usually issued by a bank or an insurance company, both of which act as a “surety.”

3. Performance Bond: How They Work?
The Government and private sector require performance bonds and payment bonds for projects to protect the tax payer’s investment.
A performance bond will protect the owner against possible losses in a case a contractor fails to perform, or is unable to deliver the project as per established and the contract provisions.

4. How Much Does a Performance Bond Cost?
as a rule of thumb, a contractor can expect the cost of a performance bond to be about 1% of the contract value. Sometimes when the contract value is over $1 million, the premium might range between 1.5% and 2%, but ultimately it will be dependent of the credit-worthiness of the builder.

5. Performance Bond Benefits
The owner of a project is assured of the completion of the project.
The owner does not need to incur additional costs.

6. Performance Bond Drawbacks
Sometimes, the surety tries to establish that the owner did not comply with the technical conditions of a bond to avoid paying the compensation.
Sometimes the surety will try to prove, that the owner may have to settle for the least expensive remedy to the problem.
The owner needs to quantify the losses that might have been suffered when a trader or contractor fails in their performance.
If the owner underestimates the losses and the future cost of the completion of the project, the owner may not be able to recover the shortfall from the surety.
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7. The end
Thank you