Construction Law/PB vs PCG

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Question
Dear Sir

What is the difference between the Performance Bond and Parent Company Guarantee.

What is the advantage of Parent Company Guarantee instead of Performance Bond for the Employer.

Br

Sudantha

Answer
Hi Sudantha
A performance bond is a sum of money that a third party - usually a bank - will promise to pay to the employer if the contractor defaults on the contract. The contractor pays the bank a fee to cover the bond. It is a type of insurance. If the contract is extended then the contractor has to pay more to extend the bond.
A parent company guarantee is where the head company of a group promises to pay for any default of its subsidiary. This gives the employer security if the subsidiary decides to go bust and escape its debts.
Best regards
Mike T.

Construction Law

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Mike Testro

Expertise

Anything related to extensions of time and delay analysis.

Experience

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

Organizations
Society of Construction Law Adjudication Society ex Planning Engineers Organisation

Publications
6 articles on the relevance of the India Contract Act 1872 and its relevance to modern construction in India. Waiting Publication

Education/Credentials
Associate Member of the Institue of Building

Past/Present Clients
Currently employed in India by Punj Lloyd as expert delay analyst. Engaged in ongoing arbitrations and EoT claims. Prior an Indepenent consultant in delay analysis.

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