What does a performance bond in a construction contract mainly protect the employer against?
Correct answer: D. Failure of the contractor to perform contractual obligations
- A. Delayed payment of wages to the contractor's workers
- B. A rise in the market price of construction materials
- C. Errors in the employer's preliminary cost estimate
- D. Failure of the contractor to perform contractual obligations
Explanation
A performance bond provides financial protection if the contractor fails to perform the contract as required. It does not normally insure the employer against general price increases, which may be addressed by a price adjustment clause.
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About Construction Management and Estimation
Construction management covers planning, scheduling, resource control, contracts, procurement, site organisation, safety, quality assurance and project documentation. Estimation includes quantity take-off, rate analysis, bill preparation, valuation and cost control, with attention to the difference between direct and indirect costs and between an estimate, a tender and a final account.
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