Certified Professional Public Buyer (CPPB) Practice Test

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What does a performance or completion bond protect a public entity from?

Failure of project funding
Loss due to incomplete contracts
Changes in contract terms
Delays caused by unforeseen circumstances

The correct answer is: Loss due to incomplete contracts

A performance or completion bond is specifically designed to provide financial assurance that a contractor will complete a project according to the terms of the contract. This type of bond protects the public entity from losses that could arise if the contractor fails to fulfill their obligations, leading to incomplete work or non-performance. In the event that a contractor defaults, the bond can be utilized to cover the costs necessary to complete the project or remedy the shortcomings. The other choices, while they represent potential risks in contract execution, do not directly align with the protective scope of a performance or completion bond. For instance, issues related to project funding or changes in contract terms pertain to different contractual and financial aspects not covered by this type of bond. Similarly, delays triggered by unforeseen circumstances are often addressed through clauses within the contract itself and do not fall under the remedial capabilities of a performance or completion bond.