💵 Retention Calculator
Track retention withheld and plan for release — because that money is yours.
What is Retention?
Retention (or retainage) is a percentage of each payment withheld until project completion. It's meant to ensure contractors complete their work.
Typical rates:
- Private work: 5-10%
- Public work: 5% (often capped by law)
- California public: 5% maximum
Quick Calculation
Retention Withheld = Contract Value × Retention %
Per-Payment Retention = Progress Payment × Retention %
Retention Balance = Sum of all retention withheld - Released amounts
Example
| Application | Billed | Retention (5%) | Payment | Retention Balance |
|---|---|---|---|---|
| Pay App #1 | $100,000 | $5,000 | $95,000 | $5,000 |
| Pay App #2 | $150,000 | $7,500 | $142,500 | $12,500 |
| Pay App #3 | $200,000 | $10,000 | $190,000 | $22,500 |
| Pay App #4 | $100,000 | $5,000 | $95,000 | $27,500 |
| Total | $550,000 | $27,500 | $522,500 |
At completion: You're owed $27,500 in retention
When is Retention Released?
Private Projects
- Per contract terms (typically at substantial completion)
- Often 30-60 days after completion
- May require lien waivers from all subs
California Public Projects
- Subcontractors: Within 7 days of sub's work acceptance
- Prime: Within 60 days of project acceptance
- Interest accrues if late (10% per annum)
Federal Projects
- Typically released at substantial completion
- FAR allows reduction to 0% at 50% completion if performing well
Retention Reduction
Some contracts allow retention reduction:
- After 50% complete, reduce from 10% to 5%
- After substantial completion, release 50%
- Upon punch list completion, release remaining
Track this in your schedule of values!
Retention on Change Orders
Don't forget: retention applies to change orders too.
| Change Order | Amount | Retention (5%) | Net Payment |
|---|---|---|---|
| CO #1 | $25,000 | $1,250 | $23,750 |
| CO #2 | $15,000 | $750 | $14,250 |
Cash Flow Impact
Retention significantly impacts cash flow. On a $1M project at 10% retention:
- $100,000 tied up until completion
- Could be 6-18 months
- That's your profit margin (or more) held hostage
Strategies to Manage Retention Cash Flow
- Negotiate lower rates — 5% instead of 10%
- Request early reduction — At 50% complete
- Retention bonds — Replace cash retention with a bond
- Track religiously — Don't let it fall through the cracks
Retention Tracking Checklist
- Note retention % in contract review
- Track retention on each pay app
- Calendar substantial completion date
- Calendar retention release date per contract
- Submit retention release request letter
- Follow up if not received within terms
- Document interest owed if late (public)
Subcontractor Retention
If you're a GC holding sub retention:
- Release within contract terms
- California: 7 days after sub's portion accepted
- Don't use sub retention as your cash reserve
- Pass through retention release promptly
Sample Retention Release Letter
Subject: Request for Retention Release — [Project Name]
Dear [Owner/GC]:
[Company Name] has completed our scope of work on [Project Name] as of [Date]. Per our contract, we request release of retention in the amount of $[Amount].
Our work has been accepted and all punch list items have been completed. Please find enclosed:
- Final lien waiver (conditional upon receipt)
- Warranty documentation
- As-built drawings
Please remit retention within [X] days per contract terms.