Retainage, or retention, is a percentage withheld from each payment until agreed events happen: usually substantial completion and then the end of the defects period. It exists to give the owner security that the job will be finished properly, and it is frequently the last money a contractor collects and the money most often forgotten. Understanding it is the difference between a final account that closes and one that drifts for a year.
How retainage works on the claim
Each payment application values the work done to date, subtracts what has been claimed before, and subtracts the retainage percentage on the new work. The withheld balance accumulates, and it is released in stages against events named in the contract. Carrying that running balance on the job record is the only reliable way to collect it.
It flows down the subcontractor schedule of values, and so does the argument
A subcontractor schedule of values carries the same breakdown and the same withholding, and the terms should mirror what is being done to you. A contractor holding retention from subs on terms it is not subject to itself is storing up a dispute.
Building construction drawings and the other documents a claim is built from
The drawings define what was contracted, so work drawings, a working drawing set and building construction drawings decide what is claimed and what is a variation. An RFI is the written question when they are unclear, and what is a method statement in construction answers how the work will be carried out. Claims that cite those documents get paid; claims that assert progress get queried.
Questions people ask about what is retainage
How much retainage is normal?
It is negotiated and set in the contract rather than fixed by custom, and it often steps down at substantial completion. Read your own contract; the figure and the release events are the two things to know before signing.
When should retainage be released?
On the events the contract names, commonly substantial completion for part and the end of the defects period for the rest. Track both dates on the job, because nobody else will remind you.
What is order management system shorthand for in this context?
An order management system is the general term for tracking orders from raised to fulfilled and invoiced. In construction the same discipline appears as the schedule of values, the claim and the retention balance: one record, tracked to the end.