How can a general contractor safeguard against subcontractor's non-performance?

Obtaining a Performance Bond is an effective way for a general contractor to safeguard against subcontractor non-performance. A Performance Bond is a type of surety bond that ensures the completion of a project according to the terms of the contract. In the event that a subcontractor fails to fulfill their obligations, the performance bond provides financial protection for the contractor and can be utilized to bankroll the hiring of another subcontractor to complete the work.

This bond essentially guarantees that the contractor will receive compensation if the subcontractor does not perform satisfactorily. This financial security enhances the contractor's leverage in managing risks associated with reliance on subcontractors. By having a Performance Bond in place, the general contractor can proceed with greater confidence, knowing that there is a financial safety net to cover potential losses due to subcontractor defaults.

Other options, such as hiring additional workers or increasing the project budget, do not address the underlying issue of a subcontractor’s non-performance and may instead lead to inefficiencies or increased costs without resolving the risk of incomplete work. A Retainage Clause can also help ensure that subcontractors complete their work to satisfaction, but it does not provide the same level of financial protection or assurance that a Performance Bond offers.