The infographic titled “Things to Know about Performance Bond for Construction”, presented by NHC, is designed with intent to provide the basic knowledge and understanding of performance bond in construction projects. These types of surety bonds are usually geared towards the construction and manufacturing sectors and other forms of construction projects. A performance bond is used to insure the project owner against the risk of contractor’s failure to fulfill the contractual responsibilities to the project owner.
The key parties involved in a construction performance bond include the Principal (contractor), Surety (performance bond agency) and obligee (project owner). Principal or contractor is the person, who performs the obligations, Surety is the agency that performs an evaluation of the contract and the contractor and financially guarantees the contract and Obligee is the project owner who is beneficiary of the bonds.
The cost of a performance bond usually depends upon on various factors such as the size, type and duration of contract, state of contractual obligation, the contractor’s history and credit. For more details about performance bond, please refer the given infographic.