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Occasionally, works on the right-of-way will require a performance bond, or an Irrevocable Letter of Credit (ILOC). An example of an ILOC is available on this site. These documents provide security to ensure that works will be completed.

Security is particularly appropriate for drilling and blasting, and for utilities permits, but typically the performance bond or ILOC is contained within a pre-existing agreement with the Ministry of Transportation. Performance bonds are required for Major Works Contracts; Minor Works and Operational Services Contracts, unless an alternate performance security has been established.

There are three parties involved in a bonding contract:

  1. The Contractor
  2. The Ministry
  3. The insurance company

The insurance company provides the Ministry with the guarantee that the contractor is honest, able and financially capable of performing the work specified in the contract.

An ILOC is a document guaranteeing that the issuer will pay the beneficiary (in this case, the Ministry of Transportation) an amount up to an agreed maximum charge, should the issuer fail to carry out their duties.