Construction - Chasing and Releasing Retention

Record the retention percentage, estimated total withheld amount, anticipated practical completion date, DLP duration, and DLP end date in the job record before work begins.

At each interim invoice, confirm the retention deduction is correctly calculated and reflected against the cumulative job cost record.

When practical completion is certified in writing, immediately raise a retention release invoice for 50% of the total withheld amount, referencing the PC certificate date and contract clause.

If the first retention invoice is not paid within agreed terms, issue a written chase with the practical completion certificate attached. Log all communications against the job record.

Track the DLP expiry date. Confirm throughout the DLP that any notified defects are being addressed to avoid deductions from the final retention amount.

When the DLP ends and no outstanding defect notices remain, immediately raise the final retention invoice for the remaining 50% of the withheld amount.

Sync both retention invoices to accounting software and confirm they reconcile against the final account settlement for the project.

Retention amounts sit buried in project records and the practical completion date passes without anyone raising an invoice - money is simply left unclaimed.

The defects liability period end date is never formally recorded at contract stage, so when it expires months later no one knows to issue the final retention invoice.

Sub-contractor retention being held and retention owed by the client are tracked together, making it impossible to know which amounts to chase and from whom.

How much retention is typically withheld on a construction contract?

Most standard construction contracts withhold 3-5% of each interim payment as retention, sometimes with a cap applied once a threshold is reached. At practical completion, 50% of the total retained amount is released - with the remaining 50% held until the end of the defects liability period. On a $200,000 contract with 5% retention, that is $10,000 total: $5,000 released at PC and $5,000 at DLP end.

What can a contractor do if the client refuses to release retention after practical completion?

Issue a formal written demand referencing the practical completion certificate date, the contract clause specifying release, and a payment deadline. In the UK, the Construction Act gives contractors specific payment notice rights. If payment is still withheld, formal dispute resolution through adjudication is available. A clear paper trail from contract stage through to the PC certificate is essential for any dispute.