What type of bonding ensures that a contractor will fulfill their obligations to the owner?

A performance bond is designed specifically to ensure that a contractor will meet their obligations as outlined in the contract with the owner. It guarantees that the contractor will complete the project according to the agreed-upon terms, including the quality of work, adherence to timelines, and compliance with all applicable regulations. If the contractor fails to fulfill these obligations, the performance bond provides a financial guarantee to the owner, allowing them to recover losses, seek a replacement contractor, or compel the completion of the project.

The other options mentioned serve different purposes. A payment bond ensures that subcontractors and suppliers are paid for their work or materials, thereby protecting their interests but not directly securing the completion of the contractor's commitments. A bid bond provides assurance that the contractor will honor their bid if awarded the contract, but it does not guarantee project completion. Lastly, a retainage bond is related to the funds withheld from the contractor as a measure to ensure project completion, but it does not itself guarantee that the contractor will actually fulfill their project obligations. Therefore, the performance bond stands out as the correct choice in confirming the contractor's commitment to the owner.