Check the retention on every certificate
Check the retention taken on every certificate against your subcontract, because the first thing disputed at release is how much is held. A mistake found in month 3 costs a phone call; the same mistake found at release costs an argument.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
Retention is worked out afresh on every certificate, and small errors add up. Common ones are the wrong percentage, or retention taken on sums the subcontract says are free of it. Others are a limit ignored once reached, or a release never credited. Nobody notices while the job runs, because the sums are small and the cash is flowing. At release, your figure and your main contractor's differ, the certificates are the only evidence, and rebuilding 2 years of them takes days. A running check, one line per certificate, keeps the figure agreed as it grows.
How to do it
- Record the retention percentage, any limit and any sums the subcontract says are free of retention.
- Check the retention taken on each certificate against the gross valuation and the percentage.
- Keep a running total of retention held, one line per certificate, with the certificate reference.
- Raise any difference in writing in the same payment cycle, while the certificate is current.
- Ask for the sum your running total shows at each release, with the certificate references attached.
Example
Illustrative example. The scenario and figures are invented.
The facts
A groundworks subcontract holds 3 per cent retention with a limit of £15,000 on the total. The subcontractor's QS keeps a running retention line against each certificate.
What happens
- By certificate 9 the retention held reaches £15,000, the limit.
- Certificate 10 takes a further £1,800 of retention, and certificate 11 another £1,650.
- The QS raises the over-deduction in writing in each cycle, citing the limit and the running total.
- The main contractor corrects it in certificate 12 and repays £3,450.
The retention in figures
| Item | Amount |
|---|---|
| Limit on retention | £15,000 |
| Taken above the limit in certificate 10 | £1,800 |
| Taken above the limit in certificate 11 | £1,650 |
| Repaid in certificate 12 | £3,450 |
The outcome
The £3,450 comes back while the job is still running. At release, both sides agree the retention held, so the only question left is the date.
To have this set up for you, see our Retention Loss Prevention service.