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Construction Law/Performance Bond and Retention second half


Dear Sir,

I manage 22 large contracts on JICA Funded Road Project. My position is CRE. I am from Sri Lanka. Conditions - Bank Harmonized version.

S.Clause 14.9 says that is the amount in Performance Guarantee is less than the second half of retention money with held, the contractor can make it a combined bond and ask for the release of retention When you execute this provision, the contractor's liability would be limited the sum guaranteed in Performance Bond. If the contractor does not attend to rectification of defects identified towards the DNP, should we encash the total bond value of should we claim the rectification cost from the guarantor only.

If any contractor failes to complete the contract within extended period, can the Employer recover delay damages and extra supervision cost that would be payable to the consultant.

expect sir your valuable clarifications.

best regards,


Hi Samarasinghe

When the contractor does not attend to rectification of genuine defects then the employer may recover the costs of the repair works from the retention fund or from the performance bond - returning any unspent balance.
If the costs exceed the sums held then the employer may recover the balance through the courts.

Damages for delay are limited to the Liquidated Damages which are agreed to cover all of the employers costs.

Best regards
Mike Testro

Construction Law

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Mike Testro


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45 years in the Construction Industry 15 Years as a consultant delay analyst - I now hold myself to be expert in this field.

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