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What does a performance bond guarantee for the project owner?

No delays during construction

A specified profit margin

Completion of the project according to contract terms

A performance bond serves as a financial guarantee to the project owner that the contractor will complete the construction project in accordance with the specified contract terms. This means that if the contractor fails to fulfill their obligations—such as completing the project on time or adhering to the agreed-upon standards—the performance bond can be claimed by the owner. The bond ensures that funds are available to cover the cost of hiring another contractor to complete the work or rectify any issues that arise during the project.

This bond does not guarantee there will be no delays during construction, nor does it specify a profit margin for the contractor or provide an immediate refund upon contract termination. Instead, it focuses solely on the contractor's obligation to complete the project as specified in the contract, making the correct answer essential for understanding the role of performance bonds in construction projects.

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Immediate refund upon contract termination

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