What Is a Performance Bond?
A performance bond is a written financial guarantee issued on behalf of a contractor, in favour of the employer or project owner. It provides the beneficiary with a defined level of financial protection if the contractor fails to complete the contract in accordance with its terms.
The bond does not remove the contractor's obligation to perform, it provides the employer with a financial remedy if that obligation is not met. As such, it is a standard risk management tool within commercial construction contracts and is required by employers, government bodies, and development organisations in markets around the world.
When Are Performance Bonds Required?
Performance bonds are a contractual requirement across a wide range of project types and geographies. They are commonly required where:
- The employer wishes to protect against the financial risk of contractor default or insolvency
- The contract is structured under an internationally recognised framework such as FIDIC, NEC, JCT, or a locally equivalent standard
- The project is publicly funded or subject to procurement requirements that mandate a bond
- The employer requires the contractor to demonstrate financial credibility before works begin
The requirement for a performance bond — including its value, form, and the institution that issues it — will typically be set out in the contract documents. Our team can help you understand what is required and connect you with a partner who can provide a suitable solution.
How a Performance Bond Works
The Parties
- Principal — the contractor who is required to provide the bond
- Beneficiary — the employer or project owner in whose favour the bond is issued
- Surety — the institution (typically a bank or insurance-backed surety provider) that issues the bond
The Process
The surety issues the bond to the beneficiary on behalf of the principal. If the principal fails to perform in accordance with the contract, the beneficiary may make a demand under the bond, up to the maximum bond amount.
The bond value is typically set as a percentage of the contract sum — commonly 10%, though this varies by contract and territory. The bond remains in place for the duration of the contract works, and in some cases into the defects liability period.
How We Can Help
Obtaining a performance bond in an international market can involve navigating unfamiliar institutions, local requirements, and language barriers. Solidum Global simplifies this by working with a network of local and international partners who understand the specific requirements of their markets.
When you submit an enquiry, we review the details of your project and contract, and connect you with a partner who is positioned to assist. We do not issue bonds directly — we facilitate access to the right solutions and the right people.
- We support enquiries for projects across multiple international territories
- Our partners understand local contract standards and bond formats
- The enquiry process is straightforward and carries no obligation
Submit a Performance Bond Enquiry
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1. Submit Your Enquiry
Use our online form to provide details of your project, contract, and the bond or guarantee required. There is no obligation at this stage.
2. We Review and Match
Our team reviews your requirements and identifies suitable partners within our international network who are positioned to assist.
3. You Receive Guidance
A partner will contact you to progress your enquiry and to ensure a smooth process.
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