INSURANCE FOR THE CIVIL & CONSTRUCTION INDUSTRY
What is a Performance Guarantee?
A Performance Guarantee is a contractors promise to complete the project undertaken. To further elaborate, a Performance Guarantee is a document that legally confirms that you, the contractor will complete the contract you have undertaken.
A Performance Guarantee is issued by an insurance company or bank to an employer on behalf of the contractor to guarantee the full and due performance of the works by the contractor as set out in the contract data.
Performance Guarantees give the contract employer confidence that they will meet their projected deadlines and have their contracts completed.
In other words, should the contractor fail to construct the building according to the specifications laid out by the contract, the client is guaranteed compensation for any monetary losses up to the amount of the performance bond.
Summary of Performance guarantee;
Protects the Employer/Principal against the risk of the contractor failing to comply with the conditions of the contract set up between the Employer & Contractor.
Benefits Performance guarantee;
Give the Employer/Principal confidence that the contractor will complete the works and therefore makes them more appealing in the tendering process.
How to qualify for a Performance guarantee;
- The first step in acquiring a Performance Guarantee is to apply for a guarantee facility.
- Once you have a facility in place you will need to apply for the project-specific Guarantee.
You will only need to set up your facility once, but you will need to apply for an individual guarantee for each and every contract undertaken.
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THE LEGAL STUFF
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