Also known as a Mobilisation Advance Bond, this guarantees that the contractor will properly utilize the advance payment given by the project owner. It protects against misuse of funds and ensures the advance is used for its intended purpose — purchasing materials, hiring labor, and mobilising equipment.
Large infrastructure projects typically provide 10–30% of the contract value as an advance to help contractors start work. This bond protects that investment.
Covers losses when the contractor diverts advance funds to purposes unrelated to the project — such as financing other projects or personal use.
Protects the project owner when the contractor takes the advance but fails to mobilise resources — equipment, materials, and labor — as per the project plan.
Compensates for delays caused because the contractor didn't use the advance to kickstart work on schedule, resulting in cascading timeline impacts.
If the contractor becomes insolvent or goes bankrupt after receiving the advance, the surety reimburses the unrecovered advance amount to the project owner.
Ensures the project owner can recover the advance payment — either through work completion or direct reimbursement by the surety if the contractor defaults.
The advance is typically recovered progressively through deductions from the contractor's running bills.
The project owner releases the mobilisation advance to the contractor. The advance money bond is issued for the full advance amount.
The contractor uses the advance to purchase materials, hire equipment, and mobilise labor to begin project work as planned.
As work progresses, the project owner recovers the advance by deducting a percentage (typically 10–20%) from each running bill submitted by the contractor.
As the advance is recovered through deductions, the bond value reduces proportionally. Once fully recovered, the bond is discharged.
Equal to the advance amount — typically 10–30% of the total contract value. Reduces as the advance is progressively recovered from running bills.
Remains active until the advance is fully recovered or the project is completed, whichever is earlier. Typically 1–3 years depending on project duration.
Project owners providing large advances, and contractors who want to access advances without pledging additional bank guarantees or collateral.