Performance & Surety Bond Calculator

The Miller Act (40 U.S.C. § 3131) requires prime contractors on US federal construction contracts exceeding the statutory $150,000 FAR threshold to furnish performance and payment bonds, each equal to 100% of the contract price.

Under FIDIC Red/Yellow Book Sub-Clause 4.2, the contractor obtains a Performance Security (typically an on-demand bank guarantee or bond equal to 10% of the Accepted Contract Amount) valid until the Defects Notification Period expires.

The penal sum is the maximum monetary liability guaranteed by the surety under the bond (100% of contract sum under US Miller Act; 10% under FIDIC Sub-Clause 4.2).

Bond premium = contract value × premium rate percentage. Rates typically range from 0.5% to 3.0% based on contractor financial strength and job size.

Performance bonds protect the owner against contractor default in project completion; payment bonds protect subcontractors and material suppliers against non-payment.

Little Miller Acts are state-level US statutes mandating performance and payment bonding requirements on state and municipal public works contracts.

An Advance Payment Guarantee (FIDIC Sub-Clause 14.2) secures advance funds disbursed to the contractor for mobilization, reducing proportionally as progress payments are certified.

Yes. Significant scope variations increasing the final contract sum trigger additional surety bond premiums (typically 1% on net additive change order value).

A performance bond is a tripartite financial guarantee issued by a surety company ensuring the contractor will complete the project according to contract terms.

Performance bonds are typically issued for 10% of total contract value in international (FIDIC) practice, or 100% of contract value under US Miller Act public projects.

Sureties calculate annual bond premiums based on contractor financial strength, experience, and credit rating, typically ranging from 0.5% to 2.0% of bond value.

An On-Demand bond permits the owner to call funds upon written notice without proving default. A Conditional bond requires proof of contractor default and actual loss.

The federal Miller Act mandates performance bonds (100% contract value) and payment bonds for all US federal building contracts exceeding $150,000.

Performance bonds remain active until practical completion, taking-over certificate issuance, or the end of the defects liability period as specified in the bond terms.

The surety has three options: finance the defaulting contractor to complete, step in and hire a replacement contractor, or pay out the bond limit to the owner.

A performance bond protects the project owner against contractor default. A payment bond guarantees the contractor will pay sub-contractors, laborers, and material suppliers.

Significant scope increases (typically > 15-20%) require issuing a bond rider or endorsement to increase the total bonded amount to match the revised contract price.

A bid bond guarantees a bidder will enter into the contract if awarded. Upon contract signing, the bid bond is released and replaced by the performance bond.