The allowable ‘Limit of Retention’ is 5% of the contract sum. Retention Money used in construction is subjected to limit as per the stated percentage in the contract which is known as ‘Limit of Retention’. The contractor has to completely finish the whole construction work under his contract from the client in order to receive the Retention Money amount which has been withheld by the client. Retention Money in Construction provides safeguard to the employer from defects which can occur during the defects liability period in construction projects if the contractor does not respond accordingly to the contract terms. In most of the construction projects, the amount of Retention Money to hold by the client in each progress claim is 10% of the construction work done and up to 5% of the contract sum.
Retention in Construction is needed because it provides a fund for rectifying defects in construction projects. The purpose of Retention in Construction is to make sure that the contractor properly completes the construction or activities required of them as per the contract. The meaning of term Retention in Construction can be described as a percentage of amounts that are certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by the client in construction related works. How Is Retention Calculated in Construction?.What Is Release of Retention in Construction?.What Is the Purpose of Retention Money?.
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