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CONSTRUCTION CONTRACT RETAIN AGE The following discussion on construction contract retain age policy and practice is offered in response to questions that were raised at the CPC Conference at UNC

How to fill out construction contract retainage

How to fill out construction contract retainage:

1. Review the construction contract: Before filling out the retainage section, thoroughly read the construction contract to understand the specific terms and conditions related to retainage.
2. Determine the retainage rate: The retainage rate is typically a percentage of the contract price that is held back as a form of security. Calculate the retainage rate based on the contract terms.
3. Identify the retainage due date: The contract should specify the retainage due date, which is usually a specific number of days after the completion of the project. Make a note of this date for future reference.
4. Prepare the retainage invoice: Create an itemized invoice that clearly lists all the completed work and the corresponding retainage amount. Ensure that the invoice includes the project name, contractor details, and any specific billing instructions outlined in the contract.
5. Submit the retainage invoice: Send the completed retainage invoice to the party responsible for reviewing and processing payments. This is typically the owner or the owner's representative. Follow any specified submission procedures, such as mailing the invoice or using an online portal.
6. Maintain documentation: Keep copies of all retainage-related paperwork, including the signed retainage invoice, proof of delivery, and any correspondence related to payment. These documents will be important for reference and potential dispute resolution.

Who needs construction contract retainage?

1. Owners: Construction contract retainage is often required by owners as a form of security against potential defects, delays, or non-performance by the contractor. It ensures that funds are withheld until the project is completed to the owner's satisfaction.
2. General contractors: General contractors may also require retainage from their subcontractors to manage risk and fulfill their obligations to the owner. They hold back a percentage of the subcontractor's payments until the project is successfully completed.
3. Subcontractors: Subcontractors, who work under the general contractor, may have retainage withheld from their payments. This is done to ensure that subcontractors fulfill their contractual obligations and meet quality standards before receiving the full payment for their services.
4. Public projects: On public construction projects, retainage is often mandated by local laws or regulations. It provides an added layer of protection for government entities or taxpayers in case of project deficiencies or performance issues.
5. Private projects: In private construction projects, the inclusion of retainage is typically at the discretion of the parties involved. Owners or general contractors may choose to include retainage as a risk management tool or a means of securing project completion.

Overall, construction contract retainage serves as a mechanism to protect the interests of various parties involved in construction projects, ensuring that the work is completed satisfactorily and upholding accountability among contractors and subcontractors.

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