The construction industry uses retention fees and dates as a type of collateral to enforce quality, time requirements and allows fault correction of the work being done. Retention tracking is cumulative and measured in percentages of the total cost of the work being done. Retention ensures that contractors and subcontractors meet their obligations and maintain high standards throughout the project.
Interim retention is usually released when specific milestones are met during contract execution. These are released when applications are created and submitted.
Final retention is typically released at a later point in time, closer to the end of the contract’s lifespan, as agreed upon by the contractor and the subcontractor. When the final retention is released, all remaining interim retentions will also be released, and no further financial transactions will be processed.
A maximum retention may optionally be defined for a contract. This is a percentage that defines the total cumulative retention allowed for a contract. Adding additional applications once the maximum retention is reached will not automatically create or release any further retentions.
In certain situations, it is necessary to define different retention percentages for specific items, typically high-value or high-risk items that should not follow the default retention on the contract. Even if an item-specific retention percentage is defined, it will still fall under the contract’s maximum retention, and the total retention cannot exceed the maximum retention defined on the contract.
When applying for payment, the application will calculate retention for each item by distributing the total accumulated retention proportionally across the items. If the required item retention amounts differ from the general rule set on the contract, you can manually override the calculated retention value. Assuming there is no need to apply a different retention amount when submitting the application, the contracted retention percentage will be used. It will only be possible to override the certified retention amount.