What Is a Performance Bond? How It Protects Owners and What It Costs Contractors

A performance bond guarantees that a contractor will complete the project per the contract — if the contractor fails, the bond's surety steps in to finish or pay for completion. Paired with a payment bond, it's the standard risk-shifting mechanism on public work and an increasingly common requirement on private work. Here is what a performance bond is, how it's priced, and why bonding capacity is often the real constraint on contractor growth.