Performance bond is an instrument issued by the bank on behalf of its customer guaranteeing the fulfilment of a contract awarded by a third party
A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor (customer). A job requiring a payment and performance bond will usually require a bid bond, prior to bidding for the job. When the job is awarded to the winning bidder, a payment and performance bond will then be required as a security for job completion. Usually 10% of the contract sum (public sector).
Performance risk is mitigated by an adequate analysis of a customer's track record of prior successfully executed jobs; analysis of technical partner’s (if any) competence, as well as the appointment of a Project Manager by the Bank.
Provision of Counter Indemnity from Insurance Company or 100% cash cover or Legal Mortgage on property (where applicable)