What type of bond assures the owner that the project will be completed within the scope of the contract?

A performance bond is a specialized type of surety bond that guarantees the project owner that the contractor will fulfill their obligations as stated in the contract. This bond ensures that the work will be completed in accordance with the terms specified, including quality, timeline, and any other contractual stipulations. If the contractor fails to meet these obligations, the performance bond provides financial assurance that the owner can claim compensation to cover any losses or costs incurred in hiring another contractor to complete the project. This type of bond is particularly important in construction projects where the scope of work is clearly defined, thereby safeguarding the owner's investment and ensuring accountability from the contractor.

In contrast, a completion bond typically provides assurance that a project will be completed, often used in the film industry or specific development projects, but it doesn't necessarily align with the contractual obligations in typical construction scenarios. A surety bond is a broader term that encompasses various types of bonds including performance bonds, while a retainage bond relates to holding back a portion of payment until the project is fully completed and does not serve the same purpose as a performance bond in guaranteeing the completion of work per contract terms.