In a public works contract, the security deposit (performance guarantee) is typically recovered from:
Choose the correct answer
Earnest money deposit already deposited by contractor
Running bills — deducted at a fixed percentage from each bill
The final bill only after virtual completion
Pre-contract advance before work begins
Correct Answer
B. Running bills — deducted at a fixed percentage from each bill
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Security deposit is deducted from running/interim bills (typically 5–10% per bill) until the full security deposit amount is retained. It is released after the defects liability period expires. This differs from EMD which is a pre-bid deposit refunded after signing.
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