What does a performance bond guarantee?

A performance bond guarantees that work will be completed in compliance with the contract specifications. This type of bond is typically required by project owners to ensure that the contractor fulfills their obligations according to the terms of the contract. If the contractor fails to complete the work as specified, the performance bond can provide financial compensation to the project owner, allowing them to engage another contractor to finish the job.

The other options do not accurately reflect the purpose of a performance bond. While a performance bond may indirectly support adherence to hiring practices (as in option A), it specifically focuses on the completion and quality of the work, not on hiring all employees. Regarding payment to all subcontractors (option C), that function is typically covered by a payment bond rather than a performance bond. Lastly, a performance bond does not offer insurance against natural disasters (option D); that would fall under a different type of insurance policy. Hence, the correct choice clearly defines the main responsibility that a performance bond covers.