Calculate your PBG amount, BG validity (including Defect Liability Period) and total bank charges for government contracts.
| PBG Amount Required @ 5% of contract value | ₹ 0 |
| BG Validity Required Contract period + DLP + 30-day buffer | — days |
| Bank BG Charges @ 0.50% p.a. for validity period | ₹ 0 |
| BG Stamp Duty (est.) Rough estimate only. Stamp duty varies significantly by state — it can be a percentage of the BG value (e.g., 0.1%–0.2%) and may be much higher than shown. Check your state's Stamp Act before finalising costs. | ₹ 200 |
| Total BG Cost (all-in) Charges + stamp (excluding PBG principal) | ₹ 0 |
| Milestone | When it Happens | PBG Status |
|---|---|---|
| Contract Signing | Day 0 | BG submitted to department |
| Work Completion | After 24 months | Some contracts release 50% PBG here |
| DLP Ends | After 36 months | Final inspection triggered |
| PBG Full Release | 30–60 days after DLP end & final inspection | BG returned / cancelled |
| Factor | Bid Bond / EMD | Performance Bank Guarantee (PBG) |
|---|---|---|
| Purpose | Ensures bidder doesn't withdraw after submitting bid | Ensures contractor completes work as per contract |
| When required | At the time of bid submission | After award of contract, before work starts |
| Typical amount | 2–3% of estimated tender cost | 5–10% of contract value |
| Validity | Bid validity period + 30 days buffer | Contract period + Defect Liability Period (DLP) + buffer |
| Released when | Winners: on signing contract. Losers: after award | After completion + DLP ends (can be 1–2 yrs post-completion) |
| Also called | EMD, Earnest Money, Bid Security | PBG, Security Deposit, Contract Performance Guarantee |
A Performance Bank Guarantee (PBG) — also called Security Deposit or Contract Performance Guarantee — is a financial guarantee submitted by the successful bidder after being awarded a government contract. It assures the tendering authority that the contractor will execute the work as per the contract terms, quality standards, and timelines. In Indian government procurement under GFR 2017 and CPWD norms, PBG is typically 5–10% of the contract value.
The Defect Liability Period (DLP) starts after the project is completed and handed over. During this period, the contractor is responsible for rectifying any defects in the work at no extra cost. DLP is typically 12–24 months as per CPWD/PWD norms. The PBG must remain valid through the entire DLP — the tendering authority can invoke the BG if the contractor fails to fix defects. Always get your bank to extend the BG before DLP expires.
PBG Amount = Contract Value × PBG %
Example: For a ₹5 crore contract at 5% PBG → ₹25,00,000 performance guarantee required.
The BG must remain valid for the full contract period plus the DLP plus an additional 30–60 day buffer for final inspection and return.
Many government contracts allow staged release of the PBG: typically 50% is released after satisfactory completion of the work, and the remaining 50% is held through the DLP. This reduces the bank charges burden on the contractor. Check your specific contract clauses for staged release eligibility — it can significantly reduce your BG cost burden for long-duration contracts.