Retainage Chart: What Is Held Back and What Is Payable
Eleven contract values against five retainage percentages, then a full progress schedule showing what is earned, what is held and what is actually payable at each application.
Retainage is a percentage of every progress payment that the owner keeps until the job is finished and accepted. Five or ten percent sounds small against a contract, and it is not small against a contractor's margin, because the margin is usually a similar size.
That is the part worth sitting with. On a job priced at a ten percent net margin with ten percent retainage, the entire profit on the contract is sitting in somebody else's account until closeout, and the work was financed out of your own pocket to get there.
Retainage held at completion
| Contract amount | 5% | 7.5% | 10% | 12.5% | 15% |
|---|---|---|---|---|---|
| $10,000 | $500.00 | $750.00 | $1,000.00 | $1,250.00 | $1,500.00 |
| $25,000 | $1,250.00 | $1,875.00 | $2,500.00 | $3,125.00 | $3,750.00 |
| $50,000 | $2,500.00 | $3,750.00 | $5,000.00 | $6,250.00 | $7,500.00 |
| $75,000 | $3,750.00 | $5,625.00 | $7,500.00 | $9,375.00 | $11,250.00 |
| $100,000 | $5,000.00 | $7,500.00 | $10,000.00 | $12,500.00 | $15,000.00 |
| $150,000 | $7,500.00 | $11,250.00 | $15,000.00 | $18,750.00 | $22,500.00 |
| $200,000 | $10,000.00 | $15,000.00 | $20,000.00 | $25,000.00 | $30,000.00 |
| $250,000 | $12,500.00 | $18,750.00 | $25,000.00 | $31,250.00 | $37,500.00 |
| $500,000 | $25,000.00 | $37,500.00 | $50,000.00 | $62,500.00 | $75,000.00 |
| $750,000 | $37,500.00 | $56,250.00 | $75,000.00 | $93,750.00 | $112,500.00 |
| $1,000,000 | $50,000.00 | $75,000.00 | $100,000.00 | $125,000.00 | $150,000.00 |
A $100,000 contract at 10 percent, application by application
| Work completed | Earned to date | Retainage held | Net payable to date |
|---|---|---|---|
| 10% | $10,000.00 | $1,000.00 | $9,000.00 |
| 20% | $20,000.00 | $2,000.00 | $18,000.00 |
| 30% | $30,000.00 | $3,000.00 | $27,000.00 |
| 40% | $40,000.00 | $4,000.00 | $36,000.00 |
| 50% | $50,000.00 | $5,000.00 | $45,000.00 |
| 60% | $60,000.00 | $6,000.00 | $54,000.00 |
| 70% | $70,000.00 | $7,000.00 | $63,000.00 |
| 80% | $80,000.00 | $8,000.00 | $72,000.00 |
| 90% | $90,000.00 | $9,000.00 | $81,000.00 |
| 100% | $100,000.00 | $10,000.00 | $90,000.00 |
At the halfway point, what is held and what is paid
| Contract | Earned at 50% | Held at 5% | Paid at 5% | Held at 10% | Paid at 10% |
|---|---|---|---|---|---|
| $10,000 | $5,000.00 | $250.00 | $4,750.00 | $500.00 | $4,500.00 |
| $25,000 | $12,500.00 | $625.00 | $11,875.00 | $1,250.00 | $11,250.00 |
| $50,000 | $25,000.00 | $1,250.00 | $23,750.00 | $2,500.00 | $22,500.00 |
| $75,000 | $37,500.00 | $1,875.00 | $35,625.00 | $3,750.00 | $33,750.00 |
| $100,000 | $50,000.00 | $2,500.00 | $47,500.00 | $5,000.00 | $45,000.00 |
| $150,000 | $75,000.00 | $3,750.00 | $71,250.00 | $7,500.00 | $67,500.00 |
| $200,000 | $100,000.00 | $5,000.00 | $95,000.00 | $10,000.00 | $90,000.00 |
| $250,000 | $125,000.00 | $6,250.00 | $118,750.00 | $12,500.00 | $112,500.00 |
| $500,000 | $250,000.00 | $12,500.00 | $237,500.00 | $25,000.00 | $225,000.00 |
| $750,000 | $375,000.00 | $18,750.00 | $356,250.00 | $37,500.00 | $337,500.00 |
| $1,000,000 | $500,000.00 | $25,000.00 | $475,000.00 | $50,000.00 | $450,000.00 |
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Retainage is a cash flow problem before it is a payment problem
The money is usually paid in the end. What it costs in the meantime is the financing of somebody else's project: payroll went out weekly, the supply house was paid in thirty days, and a slice of every invoice sat unpaid for the length of the contract plus the closeout.
On a business running several jobs at once the held amounts stack, and a contractor with four jobs in progress can easily have a whole month of payroll sitting in retainage. That is the number to put on the wall, not the percentage.
The rules are state law, and they vary a great deal
Many states cap retainage on public work, commonly at five percent, and some cap it on private work too. Several require the rate to be reduced or stopped once the job passes a percentage of completion, and most have a prompt payment statute setting a deadline for releasing it after substantial completion.
Some states also require retainage on public projects to be held in escrow or to earn interest for the contractor. None of this is uniform, and the contract cannot override a statutory cap, so the state rule is the one to read first.
Pass it down or carry it, but decide deliberately
A general contractor who withholds retainage from subcontractors at the same rate it is withheld from him has matched the problem to the money. One who pays subs in full while retainage is held upstream is financing the whole chain, which is a choice and should be a priced one.
Whatever the decision is, it belongs in the subcontract in writing, along with when it is released and what triggers the release. A subcontract that is silent on retainage is an argument waiting for the end of the job.
Getting it released
Retainage is released against completion, not against the calendar, so the practical lever is closing out cleanly: finish the punch list, deliver the warranties, the operation manuals, the as builts and the final lien waivers, and ask in writing with a date on it.
If it is being held past the statutory deadline, the prompt payment act is the tool, and in most states it carries interest and sometimes attorney fees. The lien deadline runs on its own clock and is usually shorter, which is why a lien waiver should never be signed for money that has not arrived.
Questions people ask
What is retainage in construction?
A percentage of each progress payment that the owner holds back until the work is complete and accepted. It is usually five or ten percent, and it is released at closeout.
How much is retainage usually?
Five to ten percent. Public work is often capped at five percent by statute, and many states require the rate to drop or stop once the job reaches a set percentage of completion.
Is retainage the same as retention?
Yes. Retainage is the usual American term, retention is the usual British one, and both mean money withheld from progress payments until completion.
When does retainage have to be released?
That is set by state prompt payment law and by the contract. Most states set a deadline running from substantial completion or final acceptance, and many attach interest to a late release.
Can I charge interest on late retainage?
Often yes, either because the contract says so or because a state prompt payment statute supplies a rate. Check the state rule for the project, because the statutory rate sometimes beats the one in the contract.