Retention money is a percentage held back from each contractor bill — typically 5% to 10%, as set in the contract — and released after the work is complete and the defect liability period ends, as security against defects and incomplete work.
Retention accumulates across RA bills. Contracts often release it in two parts: some on completion and the rest at the end of the defect liability period, frequently 12 months, as the contract specifies.
Some contracts let the contractor replace cash retention with a bank guarantee of the same value.
For the contractor, retention is money billed but not yet received, so it should be tracked separately from ordinary dues or it is easily forgotten at the end of a long project.
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