Rentention

Question 1

What is retention?

Answer 1

A percentage of the sums certified for payment under the construction contract, which is held back from the contractor

Question 2

What is the typical percentage of retention?

Answer 2

Typically 3-5%

Question 3

Is there any RICS publications on retention?

Answer 3

There is an RICS guidance note on retention

Question 4

What is the purpose of retention

Answer 4

To act as an assurance of project completion and also acts as a safeguard against any subsequent defects that the contractor may fail to rectify within the defects correction period.

Question 5

What can the employer use the defects monies on?

Answer 5

The employer can use the defects monies on the cost to correct said defects through another contractor if the contractor fails to rectify originally.

Question 6

How is retention released?

Answer 6

Typically, in two stages.
First stage is half of the retention amount to be certified released when the practical completion is achieved
Second stage is when the rectification period is over and then the second half of the retention is certified and released

Question 7

What dont you apply retention to?

Answer 7

Loss and expense and fluctuations

Question 8

Are there any alternatives to holding retention?

Answer 8

Procuring a retention bond to cover the retention that would otherwise have been deducted.