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Bid Bonds
This may be a requirement if you are bidding for a local government contract, for example. It represents a commitment, should your bid be successful, that you will carry out the work.
Who are they for? Contractors tendering for public works.
Performance Bonds
Performance bonds guarantee that the Bonded Principal will undertake and fulfil their contractual obligations agreed with the Beneficiary. In the event of contractual default (usually via insolvency of the Principal), the Beneficiary will hold security in the form of the bond which will reimburse and pay out losses and damages up to the maximum bond amount.
Who are they for? Main Contractors, Sub-Contractors, Service Providers.
Advance Payment Bonds
Receiving an advance payment from your Employer may allow you to forward order materials with lengthy lead times or commence preliminary services in advance of any main works being undertaken. Advance payments can be crucial for contractor’s cash flows when there are significant costs to get a project started. In exchange for the advance payment, the Employer will likely take security for the payment via an advance payment bond which will usually equal the advance payment sum.
Who are they for? Main Contractors, Sub-Contractors, Manufacturers.