10 August 2023
The many meanings of ‘performance’ in construction

If a word or phrase has several different meanings, it is called a ‘polysemous’ word. For example, the word ‘performance’ could refer to the completion of an assigned task or activity, how well somebody or something carries out a task or activity, or even the act of entertaining people through dancing, singing or acting.

In the construction industry, performance is everything. It is a key component of any construction contract. It is also used to describe how energy-efficient a building is. And is used to assess how well construction workers, contractors, and the industry in general, is doing in comparison to established benchmarks.

Performance in construction contracts

In construction contracts, ‘performance’ refers to the works that will be carried out (or performed) and the requirements that must be satisfied in order for the contract to be completed. In order to meet performance requirements, the contractor may have to:

  • Complete the works according to a specified timeline or completion date
  • Comply with regulations
  • Adhere to quality and/or health and safety standards
  • Use certain materials or products
  • Pay their suppliers on time
  • Comply with any other instructions a client may have.

Performance specifications can be general or prescriptive. A general specification will state that a certain standard must be achieved, but will leave it up to the contractor as to how they will fulfil it. Prescriptive specifications may require the contractor to use certain materials, building and/or installation methods in order to achieve the desired result.

Protecting against the risk of non-performance

Non-performance is the term used when the contracted party fails to meet an obligation laid out in their contract.  An example of non-performance might involve a contractor trying to save money on labour, resulting in a reduced workforce and subsequently the failure to complete the project by the client’s specified deadline.

Performance bonds (sometimes also known as construction guarantee bonds) can protect clients against the risk of contractual non-performance. Typically, a bond will be worth up to 10% of the contract value and can help the client to overcome the challenges created by non-performance. For example, they may use the bond to engage a new contractor to complete the project.

If you would like further information on performance bonds, please feel free to download and read our fact sheet.

Building performance

A building’s energy efficiency is rated using an energy performance certificate (EPC), ranging from ‘A’ – the most efficient – to ‘G’ – the least efficient.

As the UK moves towards its target of achieving net zero by 2050, the energy performance of buildings has come under increasing scrutiny. Research suggests that currently, nearly six in 10 (59%) households have a poor EPC rating (i.e., a rating between D and G). 

There are a number of initiatives in place to improve energy efficiency in both residential and commercial buildings across the UK, some of which place the onus on developers and some for which the responsibility falls to landlords and property owners. For example, the Minimum Energy Efficiency Standards (MEES) have made it illegal for landlords to rent a property with an EPC of less than E; if their property is not up to scratch, it is their responsibility to retrofit it. Meanwhile, the Future Homes Standard, which will apply to all new homes built from 2025, is designed to ensure that new homes will produce 75%-80% less carbon emissions than those built under current regulations.

Industry performance

There are a number of official performance reports that enable us to benchmark the performance of the industry as a whole. These include:

The reports reveal certain trends that are currently impacting industry performance:

  • Construction output and new starts are currently down, likely due to weak economic growth and the slowdown of the property market
  • All excepting the infrastructure sector, which remains relatively strong in terms of output
  • High inflation continues to squeeze profit margins, although tentative reports are coming in that cost pressures are easing slightly
  • The construction skills shortage continues to bite, with a lack of skilled labour continuing to pose a threat to continued growth and performance.

Help your clients perform with Focus

At Focus, we have specialised in construction insurance for nearly 30 years. Our ever-growing range of products, created in partnership with some of the world’s leading insurers, is designed to ensure your construction clients remain protected against a wide variety of risks.

To talk to us about Performance Bonds or any other business you are looking to place, please give us a call or email us at