#1. Bid bonds
A bid bond is a guarantee submitted alongside a tender, typically for government or larger institutional demolition projects, that compensates the client if the winning bidder withdraws or fails to sign the contract after being awarded the work. It protects the tendering process itself, not project execution, and is usually released once the contract is formally signed.
#2. Performance bonds
A performance bond is the client's main protection during the contract itself — typically a percentage of contract value, held as a bank guarantee, that the client can call on if the contractor fails to complete the works to the agreed scope, quality, or timeline. It's standard on larger demolition contracts and reasonable for a client to request even on mid-sized projects where the contract value justifies the administrative cost of arranging it.
- Bid bond — protects the tender process, released on contract signing
- Performance bond — protects execution, typically held until practical completion
- Advance payment bond — protects any mobilisation or advance payment made to the contractor
- Retention — a percentage withheld from each payment, released after a defects liability period
#3. Advance payment bonds and retention
Where a demolition contract includes an upfront mobilisation payment, an advance payment bond gives the client a mechanism to recover that payment if the contractor doesn't perform. Retention works differently — a percentage of each interim payment is held back and released after a defects liability period, giving the client leverage to ensure any post-completion issues (incomplete debris removal, site reinstatement) are actually resolved.
#4. Is a bonding requirement reasonable?
For a small residential demolition, requiring formal bank bonds is usually disproportionate to the contract value and administrative cost involved. For larger commercial, industrial, or multi-phase demolition contracts — particularly where significant payment is made in advance of work — bonding is standard practice and a reasonable client request, not an unusual or excessive one.