As used in project finance, a guaranty usually issued by an insurance company to guarantee the full and successful completion of a project by the contractor in accordance with agreed technical and performance criteria. Performance bonds are used to secure the obligations of a contractor under a construction contract. If the contractor fails to achieve final completion or any other standard set out in the construction contract, the project company will be compensated for its losses under the bond. For more information, see Practice Notes, Identifying and Managing Project Finance Risks and Understanding Project Finance Construction Contracts.