On public and large private construction jobs, you usually hear about P and P bonds. That stands for performance and payment bonds. They almost always come together. Here is what each does and why they pair up.

The performance bond

A performance bond guarantees you will finish the job the way the contract says. If you cannot complete it, the bond company steps in and pays to get the work done, up to the bond amount. It protects the project owner from being left with a half-finished project.

The payment bond

A payment bond guarantees that your subcontractors, workers, and suppliers get paid. If you do not pay them, they can file a claim on the bond. This matters most on public jobs, where workers cannot put a lien on government property. The payment bond is their safety net instead.

Why they come together

Owners want both kinds of protection: the job gets finished, and nobody below you goes unpaid. So laws like the federal Miller Act require both on most public jobs over 150,000 dollars. Many states have their own versions too. Because they pair up, they are usually sold and priced together.

What they cost

Together, P and P bonds usually run about 1 to 3 percent of the contract amount. Your credit, finances, and track record set the exact rate. The stronger your file, the lower your cost and the bigger the jobs you can bond.

Get set up

Junno Surety helps contractors line up performance and payment bonds for the right jobs. Share your contract details and basic financials, and we will quote you fast so you can bid and build with confidence.

Related guide: Read the Performance Bond guide.