When is a performance bond typically issued?

A performance bond is typically issued to ensure that a contractor will complete the project according to the agreed terms and conditions of the contract. It serves as a financial guarantee that the work will be finished to the required standards. The timing of when the bond is issued is critical to its purpose.

The correct answer indicates that the performance bond is issued once the contractor confirms project completion. This is generally when the contractor is in the final stages of fulfilling their obligations. It acts as a safeguard for the project owner, ensuring that they are protected against potential non-completion or substandard work. The specification that the bond should be confirmed at the completion stage emphasizes the importance of security for the party hiring the contractor, as it signifies that the contractor has met all contractual obligations before the bond can be officially activated or called upon.

Understanding this context highlights how performance bonds operate within the lifecycle of a project. They are not meant to be mere formalities that are signed off on at the start or mid-way through a project; their role is fundamentally tied to completion, thus providing assurance to project owners.