To ensure that the contractor has the experience and means to deal with the contract if awarded to him. This bond is a guarantee by the Surety/Insurer to cover the cost to the Principal in the event the contractor is unable to take up the award and the contract needs to be re-tendered.
An undertaking/guarantee by the Surety/Insurer to pay compensation to the Principal where the contractor has been advanced funds by the Principal to commence the work. Where an advance payment is made, the Principal needs to be sure that this will be expended on the contract.
This bond is to guarantee that the contractor will use the advanced payment in the manner it is prescribed.
An undertaking/guarantee by the Surety/Insurer to pay compensation to the Principal if the person guaranteed by the bond (contractor) fails to fulfil his obligation under the terms of the contract to complete the performance of the contract works and in the manner so prescribed.