Performance Bond

A guarantee from a surety (bank or insurer) that the contractor will complete the works — typically 12.5% of the contract sum on Irish public works.

A performance bond is an undertaking by a third-party surety (a bank or specialist insurer) to pay the contracting authority a defined sum if the contractor fails to perform the contract. On Irish public works contracts (PW-CF series) the bond is typically 12.5% of the contract sum, callable on default or insolvency. Bond capacity must be arranged before tendering — confirming a willing surety is part of the tender process. Bond costs (1–3% of bond value annually, depending on covenant strength) need to be priced into the bid. On large contracts a parent-company guarantee may be required in addition to or instead of a surety bond.