What is a performance link?

One of the main problems that the person has when hiring the supplier is whether the person will be able to perform this work. Although the supplier is qualified and has a good reputation, its business can suffer a catastrophic event or a financial crisis that could endanger the project. To alleviate this concerns, it has become a standard practice in large construction projects to ensure that the supplier gets a performance bond. Executive bonds are bonds issued by a bank or insurance company that ensures that the supplier satisfactorily complements the project. In the United States, bonds are generally issued by an insurance company, although they can be issued by a bank or even a private party. In all cases, the performance bond represents a three -way contract between the owner or the director, the supplier called the mandatory and ThSavation offers a bond known as a guarantee. It is not an insurance policy, but a financial guarantee that the work will be done satisfactorily.

While the supplier is a party that receives a performance bond, the costs are paid by the owner and should be included in the offer. It covers 100% of contractual costs and usually has a defined time limit to complete the task. The bond also guarantees that the cost of the project will correspond to the offer provided that the owner is holding the work defined in the contract. If the owner wants to make changes to the road, a contract should be made to define any additional costs and time required to complete. Once the work is satisfactorily completed, the bond becomes invalid.

If the supplier becomes insolvency, he takes over the budget, or for other reason he does not complete the work in time, he is considered to be inhabitants. If the default value occurs, the binding usually gives the owner three options; Can get money to complete the work itself, can choose a new supplier, or may allow the company to ensure that it can find a new deliveryAteli. The completion of the project will be provided to the original contractual costs.

Performance is also a name previously used in the United States, to reference to the collateral deposit, which the investor must require when entering futures contract. This bond or margin account, as it is now called, is used to cover the financial risk of the broker when processing an account. Futures contract is a contract for the purchase of a specific number of commodities or financial instruments at a specified price on the future date. These contracts are traded on a central financial exchange.

In the US, a powerful bond is required only for government projects that exceed $ 100,000 in the US (USD). In general, it is not appropriate for the owner to insist on Bonud for a little work. Given that the fee for such a bond would be small, it could be very difficult for the supplier to find certainty willing to cover the reconstruction of the bathroom or a new package. On the main project, however, a powerful bond is a useful investment.