Clarity in the Era of Megaprojects: Rethinking Performance Security

Clarity in the Era of Megaprojects: Rethinking Performance Security
April 1, 2026 11 mins

Clarity in the Era of Megaprojects: Rethinking Performance Security

Rethinking Performance Security for Megaprojects: Performance Bonds, Surety Capacity and Capital Clarity

As megaprojects scale and risk capital tightens, clarity has become central to effective performance security. Understanding how surety capacity, performance bonds, bank guarantees, instruments and regional requirements interact helps preserve liquidity, protect margins and deliver complex projects.

Key Takeaways
  1. The expansion of digital infrastructure, power generation and other critical assets is contributing to increased complexity in performance risk and construction risk profiles, where size, complexity and concurrency matter alongside contractor credit quality.
  2. By 2030, up to $3 trillion in capital may be required to support global data center expansion alone, intensifying competition for surety capacity, bonding capacity and bank credit, while accelerating the need for more disciplined allocation.
  3. Organizations that align performance security to risk, regional realities and portfolio‑level capacity constraints are better positioned to preserve liquidity, protect margins and deliver complex projects as scale continues to increase.

Construction markets are moving — but not in a single direction. Contractor insolvencies have risen in parts of Europe and Australia, reshaping owner expectations and increasing scrutiny around performance protection. At the same time, the U.S., Canada and Latin America continue to see strong pipelines across digital infrastructure, power generation and other critical assets. This divergence has created a more complex and uneven performance risk landscape — one where assumptions that once held true no longer apply universally.

Against this backdrop, performance security, performance bonds and bank guarantees are being re‑examined. As projects grow in scale, duration and capital intensity, performance security is shifting from a contractual requirement to a strategic lever for capital efficiency, liquidity preservation and delivery certainty.

“Projects are growing in a way that’s meaningfully exponential,” notes Martha Gaines, Aon’s North America Contract Surety Practice Leader. “A focus on capacity has really emerged as a key component of clients’ ability to sustain meaningful growth.”

Confidence alone is no longer sufficient. Organizations need clarity on how performance security consumes capital, interacts with construction performance risk, and supports sustainable growth and profitability across portfolios.

Macro Forces Reshaping Performance Risk

Several structural forces are converging to redefine performance and construction risk dynamics:

  • Supply Chain Fragility

    Supply chain fragility continues to disrupt schedules and pricing, particularly on multi-year, complex projects where swings in material costs can alter project economics unless contracts provide relief mechanisms. Increasing geopolitical conflict, policy divergence and cross‑border instability add further uncertainty — especially for contractors operating across multiple jurisdictions.

  • Macroeconomic Instability

    Broader macroeconomic instability is beginning to influence how performance security is structured. Construction activity has remained resilient. However, tightening bank capital requirements — particularly across Europe — are affecting the cost and availability of bank guarantees and on-demand instruments. This is prompting organizations to reassess traditional approaches and compare bank guarantees versus surety solutions.

  • Sector Rotation

    Sector rotation has added another layer of complexity. In Canada, increased claims activity has emerged as contractors move between sectors, while the U.S. middle market has remained broadly stable. Elsewhere, heightened insolvencies in recent years in France, the UK and Australia are influencing bonding expectations and owner behavior.

    As Daniel Storr, Aon’s Co‑Head of Surety in Europe, the Middle East and Africa, notes: “Rising insolvencies and tighter bank capital requirements are reshaping the UK performance security landscape. More contractors and developers are turning to surety to protect liquidity, preserve credit lines and stay competitive as project sizes increase.”

Overlaying all of this is the most consequential shift of all: the rise of megaprojects and large infrastructure programs.

17%

of all UK business insolvencies come from construction, making it the worst hit sector in the 12 months leading to mid-2025.

Source: Insolvency Service

Quote icon

As projects grow in scale across multiple markets, clients need performance security structures that deploy capital in the most efficient way. Blending traditional surety with the more liquid instruments required for energy and data center projects is becoming essential.

Mariano Viale
Chief Commercial Officer, Global Surety

Megaprojects Change the Performance Security Equation

Megaprojects tend to intensify capacity demands because exposures accumulate across large, concurrent programs. Multi-billion dollar programs across transportation, water and wastewater, civil infrastructure, energy, battery plants and data center construction projects are stretching labor pools, specialist trades, supply chains — and critically — surety capacity and bonding capacity.

These large-scale programs concentrate exposure, compress timelines and intensify pressure on labor and supply chains. When running concurrently, performance security shifts from a project‑specific requirement to a portfolio‑level capital allocation decision.

This change is already influencing how contractors and owners approach requirements. “Contractors continue to try to drive project owners to craft surety and performance security requirements to more reasonable levels in order to preserve capacity and efficiently use capital,” explains Gaines.

This perspective highlights an important truth: Over-securing projects does not increase certainty. Instead, it reduces flexibility, ties up scarce capacity and can ultimately undermine delivery.

Clarity, therefore, is not about minimizing protection. It is about right-sizing performance security instruments — whether surety bonds, on-demand bank guarantees or hybrid structures — so capital works harder, not longer, and liquidity is preserved.

Typical Performance Bond Levels by Region
EMEA Canada U.S LATAM APAC
10% 50% 100% 20% 15%

Bond percentages vary by jurisdiction and materially affect capacity planning.


Instrument EMEA Canada U.S. LATAM
Surety Bonds ☑ ☑ ☑ ☑
Credit Solutions ☑ ☑ ☑ ☑
Subcontractor Default Insurance (SDI) ✕ ☑ ☑ ✕

SDI availability is limited to North America.

Capacity Constraints Are Emerging Across the Market

Globally, the surety industry remains well-capitalized, with strong premium growth and relatively low loss ratios. But beneath this positive outlook, early signs of aggregate capacity strain are emerging.

The pressure is not being driven by widespread insolvency, but by megaproject scale and concurrency. Large global contractors carrying multi‑market backlogs are beginning to encounter the limits of aggregate bonding capacity — particularly as megaprojects progress in parallel.

This dynamic is prompting greater use of co‑surety and syndicated surety programs, allowing risk to spread across markets. It is also sharpening focus on reinsurance and surety capacity, where tightening treaty terms — especially following losses in renewable energy — are shaping primary surety appetite.

At the same time, tighter bank capital requirements in certain regions are affecting the cost and availability of bank guarantees, contributing to increased use of surety as an alternative source of performance support.1

The result is clear: Capacity is being deployed more selectively. Surety markets are concentrating their support behind contractors that demonstrate disciplined contractual structures, strong margins and contingencies, reliable project‑economics modeling and sustainable cash‑flow profiles.

“Large critical infrastructure projects in the U.S. and Canada are supported by a finite amount of sureties,” says Gaines.

That reality is already forcing structural change. As Peter Kapler, Aon’s Managing Director of Performance Security in Canada explains: “There is an inherent upper limit to deployable bonding capacity. As project sizes increase, the market is moving away from traditional 100‑100‑50 structures, reflecting the reality that a project valued at $8 billion cannot feasibly be supported by an $8 billion performance bond.”

This is not a future risk — it is a present-day driver of market evolution. Capacity constraints are pushing the market toward more selective deployment, co-surety structures and closer scrutiny of contractual risk and margin discipline.

Data Centers and the New Energy Imperative: Where Clarity Becomes Critical

Data centers sit at the intersection of nearly every trend reshaping performance security. Their rapid expansion is driving exceptional demand for specialist labor, placing unprecedented strain on energy infrastructure and accelerating what is widely recognized as a global infrastructure investment super‑cycle. By 2030, up to $6.7 trillion2 in capital will be required to support data center growth and the power, grid and construction capacity it demands.

50%

of global surety market share can be attributed to North America, reflecting concentration risk as megaprojects scale concurrently.

Source: Global Surety Market report

Quote icon

Data center development is driving unprecedented demand for specialist labor and new forms of performance security. Capacity is sufficient today, but the scale of upcoming megaprojects means the industry must prepare for a future tipping point.

Martha Gaines
Contract Surety Practice Leader, North America

From a performance security perspective, data centers require a broader and more nuanced toolkit than traditional infrastructure projects. During construction, performance bonds — and in North America, subcontractor default insurance — remain critical for managing completion and trade‑level risk. Once projects move into operation, however, financial guarantees tied to grid interconnection and long‑term power purchase agreements become central to project viability.

These operational obligations frequently require on‑demand instruments, where surety appetite is more selective and capital consumption is materially higher. Given these dynamics, organizations are increasingly assessing their instrument needs early, weighing liquidity considerations against the efficient use of credit lines.

Viale highlights the scale and urgency of this shift: “On the data center front, the consumption of capacity can be significant — particularly for on‑demand instruments — compared with what we typically see in traditional conditional bonds. We’re talking about power purchase agreements, interconnection agreements and capacity used for on‑demand instruments that can be executed within five days.”

What This Means for Data Center Developers and Owners

Energy policy volatility and regulatory changes concerning tariffs and foreign entities further amplify these challenges. Shifting incentive regimes, long inter-connection queues, persistent grid constraints and recent losses in renewable sectors are feeding greater underwriting caution and reinsurance sensitivity — making clarity in performance security design more critical than ever.

Without a clear understanding of how traditional performance bonds and highly liquid financial guarantees interact and compete for the same pool of capital, organizations risk misallocating capacity and encountering constraints only after commitments have been made.

Reinsurance: The Hidden Influence on Capacity

Reinsurance: The Hidden Influence on Capacity

While clients engage with primary surety providers, those markets are shaped by a smaller and less diversified pool of reinsurance capital. As a result, primary surety appetite and capacity deployment are increasingly influenced by reinsurance treaty terms and reinsurer risk tolerance, rather than project‑level fundamentals alone. This upstream dynamic means capacity constraints can emerge well before they are visible at the contractor or project level. Effective performance security now requires clarity, not only on project risk, but on how capital is supported and constrained across the risk-transfer chain — from reinsurance through co‑surety structures to project‑level instruments.

Clarity Protects Capacity and Profitability

Performance security is evolving in step with the projects it supports. The growth of megaprojects and the acceleration of digital infrastructure development, electrification and energy transition, along with tightening capital conditions, are fundamentally reshaping how capacity must be managed.

This shift is not simply increasing demand for performance security; it is redefining how security is structured, priced and deployed. Capacity is finite. Different instruments — from performance bonds and conditional surety to on‑demand bank guarantees and letters of credit — compete for the same pool of capital. And misalignment carries tangible financial consequences.

Organizations that approach performance security with clear, disciplined intent — aligning instruments to risk, preserving liquidity and planning for aggregate capacity constraints — may be better placed to support complex project delivery, margin management and long‑term surety programs.

In the era of megaprojects, clarity around how instruments consume capital has become an important enabler of complex project delivery. Learn how your organization can benefit from construction insurance and risk management.

Aon’s Thought Leaders
  • Martha Gaines
    Contract Surety Practice Leader, North America
  • Peter Kapler
    Managing Director, Performance Security, Canada
  • Daniel Storr
    Co-Head, Surety, Europe, the Middle East and Africa
  • Tariq Taherbhai
    Global Chief Commercial Officer, Construction and Infrastructure
  • Mariano Viale
    Chief Commercial Officer, Global Surety

1 Sureties can complement liquidity for guarantee facilities, Association of Corporate Treasurers (ACT)
2 Beyond compute: Infrastructure that powers and cools AI data centers, McKinsey

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This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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