Construction Performance Bonds
Specialist Construction Performance Bond Providers
ERM Financial Services has specialised in providing construction performance bonds and comprehensive insurance policies to companies across Ireland for almost 30 years. So put your business in hands you know you can trust.
Established in 1993.
Over 100 years' experience.
10 dedicated team members.
Over 1,000 Irish customers served.
Construction Performance Bonds / Contract Bonds
Construction performance bonds are commonly used as a means of insuring a client against the risk of a contractor failing to fulfil their obligations.
Performance bonds are typically set around 10% of the contract value. This compensation can enable the client to overcome difficulties that have been caused by non-performance of the contractor, such as, finding a new contractor to complete the works.
For the client, it helps to guarantee satisfactory completion of a project, and for the contractor, it is often a prerequisite to consideration for tenders.
At ERM Financial Services, the construction sector is one of our principal specialities. Our staff understand the nuances of your industry and have both the expertise and experience you need.
Simply get in touch today and let us take care of the rest. You can fill out our contact form, email us at email@example.com or call us now on 01 845 4361.
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ERM Financial Services has been providing tailored and specialised services to the construction sector for almost 30 years, and have developed a reputation you know you can rely on.
Why choose ERM Financial Services for Performance Bonds Ireland?
Specialist expertise, reliable advice and unbeatable service since 1993.
- Specialised knowledge & understanding of insurance for the Irish construction sector
- Access to markets for construction performance bonds
- Experience insuring Owner Controlled insurance programmes
- Competitively Priced
- Dedicated Account Manager
- Over 100 Years Experience
What is a performance bond?
Simply put, a performance bond is a guarantee that a contract will be fulfilled.
Performance bonds are not insurance but rather a form of credit whereby the principals are required to provide payment for claims. There are many types, but typically, it is a tripartite contract whereby a guarantor agrees to pay the beneficiary a predetermined amount if the principal fails to meet their contractual obligations.
The main benefit for the principal is that they are not usually required to provide collateral, which frees up capital. This makes performance bonds more attractive than alternatives such as posting cash or obtaining a letter of credit.
The use of performance bonds has significantly increased particularly in with Government & Local Authority Contracts; and many contractors and sub-contractors are now required to provide a performance bond to be awarded contracts.
The most common reason for a bond being called is the insolvency of the principal. The client is guaranteed compensation for any monetary loss up to the amount of the bond. This money covers any losses incurred by the client – for example, the cost of finding new contractors to complete an unfinished project.
The amount of the bond is typically set at 10% of the contract value, depending on the contractor’s credit and financial history, the size of the project, and other factors.
Performance Bonds may also provide a guarantee after a project is completed, during the defects liability period (normally 6 to 24 months). If there are structural defects or maintenance issues, the contractor will be required to bring the work up to the correct standard.
There are two main types of performance bonds:
On-Demand Performance Bonds
On-demand bonds are most commonly used in large, international projects, and stipulate that if requested in writing, the bond will immediately be paid out in full. The client will not need to prove anything (including the contractor’s liability) or fulfil any conditions to claim the bond.
Conditional Performance Bonds
Conditional bonds are a more common and require that the client meets certain conditions before the bond will be paid out – normally that the client has to provide evidence that the contractor did not meet their obligations and that they have therefore suffered losses. They also cover the client should the contractor become insolvent.