works, should be clearly described in the bidding documents. The bidding doc uments should likewise contain the terms of any security, which may be required for advance payments and the method for the reimbursement of advances. The amount of advance payment may not exceed 20% of the original contract price. 2.14 Guarantees, performance bonds, and retention money Bidding documents for civil works should normally require some form of security to guarantee that the work will be continued in case of failure of performance by the contractor. This security should be provided by a performance bond, or bank guar antee, at the bidder’s option, in a form and amount appropriate for each as spec ified in the bidding documents. The amount of the bond or guarantee may vary, depending on which of these types of security is furnished, and will also depend on the type and magnitude of the work. It should be sufficient, however, to protect the recipient in case of breach of contract by the contractor. Its life should extend sufficiently beyond estimated completion of the works to cover the warranty of maintenance period specified in the contract. Contracts should normally provide for a certain percentage of the total payment to be held as retention money to secure compliance by the contractor. In contracts for the supply of goods, it may be preferable to rely on one sec urity than on a combination of securities. The supplier or manufacturer should be required to provide a performance bond or bank guarantee or retention money, depending on the market conditions and commercial practice for the particular type of goods, to guarantee performance and warranty obligations. Such bond or guarantee or retention money should be in a reasonable amount and should norm ally be valid during the warranty period of the equipment. 2.15 Insurance The bidding documents should state precisely the types and terms of insurance to be provided by the successful bidder. 2.16 Liquidated damage and bonus clauses Liquidated damage or similar clauses in an appropriate amount should be included in bidding documents when delays in completion of works or delivery of goods, or failure of the works or goods to meet performance requirements would result in extra cost, loss of revenue, or loss of other benefits to the recipient. Provision may also be made for a bonus to be paid to contractors for completion of works ahead of the time specified in the contract when such earlier completion would be of obvious benefit to the recipient.
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