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.
The interim retention will usually
be released when specific milestones are met during contract execution and are
released when applications are created and submitted. The final retention will
usually be released at some later point in time, closer to the end of the contract’s
lifespan, at a time agreed upon by the contractor and the sub-contractor.
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; a percentage
defining the total accumulative retention percentage 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,
there is also a need to define different retention percentages by items. This
could typically be high value or high risk items that should not follow the
default retention on the contract. Should such an item retention percentage
be defined, it will still fall under the contract 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. In situations where the required item retention amounts should be
different from the general rule set on the contract, you will be allowed to
override the calculated retention value manually. With the assumption that there
will be no need to apply for a different retention amount when submitting the
application, and that the contracted retention percentage will be used when
submitting application, it will only be possible to override the certified retention
amount.