August 19, 2022

What is Retention Money in Construction Contracts

Retention money is one of the important term in construction projects.This article briefly describes the definition of retention money and how to deduct it from contractor’s claim.

What is Retention Money in Construction Contracts

What is Retention Money in Construction Contracts?

Retention money is  the amount of money deducted in the progress claim and keep by the employer. This is to safeguard the employer from any non-conformance of work by the contractor.

Usually in construction contracts,10% of the progress claim is deducted as retention money. However, the limit of retention is 5%. That means, the employer cannot deduct further money once the total deduction reaches the amount of 5% of the total construction project value.

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Amila Gamage

Amila Gamage is the founder of Sihela Consultants and Builtlogy digital magazine. Her experience in the construction industry is over 17 years specializing in contract management. She is also an ACLP certified trainer in Singapore and conducts workshops and training sessions on related topics.

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