You are here:

Construction Law/Performance Bond vs Parent Company Guarantee

Advertisement


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
Dear Sudantha


Parent company guarantees and performance bonds are collaterals used as surety when the projects are awarded.


PGC or a parent company guarantee in favour of the developer in terms of which that Guarantor guarantees the performance of the contractor under the building contract. When a subsidiary of a Company is working in another location then a Parent Company Guarantee is demeaned by the Client.

A performance bond on the other hand is usually provided in favour of the Client by an independent financial institute (usually a bank) to ensure Performance. This is usually 10% of Accepted Contract Price.

Hope this clarifies your query.

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Manish Gupta

Expertise

I can answer questions related to Cost Planning, Contract Administration, Construction Law & Other Post Contract QS related areas.

Experience

7 Years with Contractors 12 plus Years with Owners & Consultants

Organizations
Calgary Project Consultants, Jacobs International, Turner International, J Ray McDermott Inc. Hindustan Construction Company

Education/Credentials
MRICS, MCIArb, BE (Civil), PGDCM LLM-Constuction Law in Arbitration and Adjudication

©2016 About.com. All rights reserved.