Preparing the published article.
Bid Bonds and Performance Guarantees
Securities that protect the buyer, and cost the supplier.
What each one covers
| Instrument | Purpose | Typical form |
|---|---|---|
| Bid bond | Prevents withdrawal during validity | Bank guarantee or insurance |
| Performance bond | Covers delivery and performance | 5–10% of contract value |
| Advance payment guarantee | Protects prepayment | Matches the advance |
| Retention | Covers defects after acceptance | Withheld from payments |
Practical notes
- Check whether the guarantee must be from a local bank.
- Confirm the release conditions and expiry, so money is not locked up unnecessarily.
- A buyer should keep acceptance criteria clear — otherwise the security gets disputed rather than called.