Retention money is a portion of every RA bill that the paying party keeps aside instead of paying out. It protects the client or main contractor if the work is left incomplete or defects appear after handover. The same idea applies down the chain, when a main contractor holds retention from its subcontractors.
The percentage, any cap on the total, and when and how it is released are all set in the contract, so read your own terms. Often part is released at completion and the rest after the defects liability period. Some contracts allow a bank guarantee in place of cash retention.
Because retention builds up quietly over many bills, it is easy to lose track of. Keep a running total per contract and a release date, so it is claimed on time. Unclaimed retention is simply money the contractor has earned and not collected.
Example
Illustrative: if the contract says 5% retention and an RA bill is ₹2,00,000 gross, ₹10,000 is held back and ₹1,90,000 is paid before other deductions.
Subcontractor management in CivilPilot
Work orders, progress, RA bills, retention and advances for every subcontractor, with a portal they can use.
