What is the difference between a bid security and a performance security?

A bid security comes with your bid and covers the tender stage. A performance security comes from the winner after award and covers performance of the contract. See what a bid bond is.

Is a performance bond the same as a performance guarantee?

Not in the World Bank's forms. The demand guarantee pays on a complying demand. The bond is issued by a surety, which may remedy the default, complete the work or pay.

What happens if I win but cannot get the performance security?

The employer may annul the award and forfeit your bid security. It may then award the contract to the next bidder. Under the World Bank document, this applies once the 28 days have passed.

Who pays for the performance security?

The contractor does. The World Bank's amended Sub-Clause 4.2 says the contractor obtains it at its own cost.

Can the employer call the guarantee without proof?

The World Bank's demand guarantee form says the employer need not prove its grounds to the guarantor. The contract still allows claims only for amounts the employer is entitled to.

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Answer · Tender terms explained

What is a performance security in a construction contract?

A performance security is a guarantee or bond the winning contractor gives the employer, as protection against breach of contract. Under the World Bank's September 2025 works document, it is due within 28 days of the letter of acceptance. World Bank rules say bank guarantees should normally not exceed 10% of the contract price.

Rules here come from standard documents checked in November 2026. The tender's own documents always decide.

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When is a performance security due?

It comes after award, not with your bid. The World Bank document gives you 28 days from receiving the letter of acceptance (ITB 49.1). ADB's works guide of December 2024 sets the same period (ITB 46.1). You must also sign the contract agreement within 28 days of receiving it (World Bank ITB 48).

Missing either step is serious. The employer may annul the award and forfeit your bid security. It may then award the contract to the next bidder (World Bank ITB 49.2).

Ask your bank or surety before you bid. ADB's letter of bid commits you to obtain the security if your bid is accepted.

What forms can it take?

The Contract Data, against Sub-Clause 4.2, names the form you must provide. The World Bank document offers two options in Section X. ADB's guide uses an unconditional demand guarantee.

World Bank: a foreign bond issuer needs a correspondent institution in the employer's country, unless the employer agrees in writing.
ADB: a bank outside the employer's country must be counter-guaranteed or payable through a bank in that country.
Use the form in the tender, or another form the employer accepts.

Form

Answer · Tender terms explainedBid bondA bid bond is a bid security from an insurer or surety. A bank guarantee comes from a bank. Both protect the employer. The tender decides which it accepts.Guide · Securities and datesBid security and validityWhat a bid security is, the forms it can take, how long it must stay valid, how a bid-securing declaration differs, and the errors that get bids rejected.Answer · Tender terms explainedFIDICFIDIC is the International Federation of Consulting Engineers. It publishes the contract forms many tenders use, so its books decide much of your risk.

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Demand guarantee	A reputable bank or financial institution you select	On the employer's complying demand stating that you are in breach. The employer need not prove its grounds.
Performance bond	A bonding or insurance company acceptable to the employer	If you are declared in default, the surety may remedy it, complete the contract, arrange a new contractor or pay, up to the bond amount.

What is a performance security in a construction contract?

When is a performance security due?

What forms can it take?

See what a tender asks for before you commit

How much is a performance security?

How long must it stay valid?

What happens when it is called?

Where Bidligence fits

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What is a performance security in a construction contract?

When is a performance security due?

What forms can it take?

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See what a tender asks for before you commit

How much is a performance security?

How long must it stay valid?

What happens when it is called?

Where Bidligence fits

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