Enter the contract amount and the percentage of the contract amount that the bond covers into the calculator to determine the performance bond amount. This calculator can also evaluate any of the variables given the others are known.

## Performance Bond Formula

The following formula is used to calculate the performance bond amount.

PB = (C * P) / 100

Variables:

• PB is the performance bond amount C is the contract amount P is the percentage of the contract amount that the bond covers

To calculate the performance bond amount, multiply the contract amount by the percentage of the contract amount that the bond covers, then divide the result by 100.

## What is a Performance Bond?

A performance bond is a type of surety bond issued by a bank or an insurance company to guarantee satisfactory completion of a project by a contractor. It is typically used in the construction industry as a means of insuring a client against the risk of a contractor failing to fulfill contractual obligations. If the contractor fails to perform, the client can claim compensation up to the full amount of the bond.

## How to Calculate Performance Bond?

The following steps outline how to calculate the Performance Bond:

1. First, determine the contract amount (C).
2. Next, determine the percentage of the contract amount that the bond covers (P).
3. Next, gather the formula from above = PB = (C * P) / 100.
4. Finally, calculate the Performance Bond amount (PB).
5. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem:

Use the following variables as an example problem to test your knowledge.

Contract amount (C) = \$500,000

Percentage of the contract amount that the bond covers (P) = 5%