Completion bond
A completion bond, also known completion guarantee is a type of surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor according to the terms and conditions of the contract. If the contractor fails to do so, the bond provides financial protection to the client (usually the project owner). If the contractor defaults or fails to complete the project, the bond issuer (the surety) steps in to cover the costs needed to complete the project, up to the bond amount. This caan help maintain trust and stability in the industry, ensuring that projects are completed as agreed and financial risks are managed effectively.
The contractor applies for the bond through a surety company, providing financial statements, project details, and other necessary documentation. The surety evaluates the contractor’s ability to complete the project, including their financial stability, experience, and track record. If approved, the surety issues the bond, usually for a fee or premium paid by the contractor.
If the contractor fails to meet the contractual obligations, the project owner can file a claim against the bond. The surety investigates the claim to determine its validity. If the claim is valid, the surety may provide financial compensation or arrange for the completion of the project through another contractor.
For project owners, completion bonds mitigate the risk of contractor default, ensuring project completion or financial compensation. For contractors, having a completion bond can enhance credibility and trust with clients, demonstrating financial stability and reliability. In some cases, particularly for public projects, obtaining a completion bond may be a legal requirement.
[edit] Related articles on Designing Buildings
Featured articles and news
AI and automation in 3D modelling and spatial design
Can almost half of design development tasks be automated?
Minister quizzed, as responsibility transfers to MHCLG and BSR publishes new building control guidance.
UK environmental regulations reform 2025
Amid wider new approaches to ensure regulators and regulation support growth.
The maintenance challenge of tenements.
BSRIA Statutory Compliance Inspection Checklist
BG80/2025 now significantly updated to include requirements related to important changes in legislation.
Shortlist for the 2025 Roofscape Design Awards
Talent and innovation showcase announcement from the trussed rafter industry.
OpenUSD possibilities: Look before you leap
Being ready for the OpenUSD solutions set to transform architecture and design.
Global Asbestos Awareness Week 2025
Highlighting the continuing threat to trades persons.
Retrofit of Buildings, a CIOB Technical Publication
Now available in Arabic and Chinese aswell as English.
The context, schemes, standards, roles and relevance of the Building Safety Act.
Retrofit 25 – What's Stopping Us?
Exhibition Opens at The Building Centre.
Types of work to existing buildings
A simple circular economy wiki breakdown with further links.
A threat to the creativity that makes London special.
How can digital twins boost profitability within construction?
The smart construction dashboard, as-built data and site changes forming an accurate digital twin.
Unlocking surplus public defence land and more to speed up the delivery of housing.
The Planning and Infrastructure Bill
An outline of the bill with a mix of reactions on potential impacts from IHBC, CIEEM, CIC, ACE and EIC.