A performance bond safeguards the interest of the owner of a project and ensures that the project finishes on time, irrespective of any unforeseen circumstance that may otherwise hinder the completion of the project. Following are some of the key benefits of performance bond:
Confidence: Performance bond Singapore lends credence to the ability of a contractor who is about to undertake a project, as stringent measures are taken to assess the financial and professional credentials of the contractor before the bond is issued. The whole prequalification process instills project owner’s confidence in the contractor as the project owner is assured about the ability of the contractor and enough proof that the contractor, in the past, has complied with the guidelines of the completed projects.
Financial security: A performance bond ensures that the project owner doesn’t incur any loss during the course of the project, if the contractor defaults, or pays any additional cost for the completion of the project. If the contractor fails to comply with the terms and conditions of the project or declares bankruptcy before the completion of the project, the owner becomes entitled to make a claim and that’s when the surety company steps in. The surety company then verifies the legitimacy of the claim and takes a decision based on the findings. If the claim has substantial merit, then the surety company ensures that the owner is not impacted financially as a result of the default.
Guarantees completion of a project: A performance bond is meant to protect the interest of a project owner and it ensures the completion of a project even if an undesirable situation crops up. If a contractor fails to adhere to the terms and conditions specified in the contract, the surety company steps in to ensure that the project finishes as planned. Upon receipt of a valid claim, the surety company would either provide financial funding for the completion of the project or would hire a new contractor to complete the pending work.
Apart from that, performance bond Singapore entails other associated benefits as well. If the contractor exceeds the deadline of the project or violates budgetary constraints specified in the contract, the project owner can make a claim. In short, it provides all necessary protections to project owners and they should ideally ask contractors to obtain performance bonds before entering into a contract so that their project is not affected by a situation that can be avoided if preventive measures are taken.