The construction industry uses retention fees and
dates as a type of collateral to enforce quality, time requirements and allows
fault correction of the work being done. Retention tracking is cumulative and
measured in percentages of the total cost of the work being done.
The interim
retention will usually be released when specific milestones are met during
contract execution and are released automatically when applications are created
and submitted. The final retention will usually be released at some later point
in time, closer to the end of the contract’s lifespan, at a time agreed upon by
the contractor and the sub-contractor.
When the final retention is released, all remaining interim retentions will also
be released and no further financial transactions will be processed.
A maximum retention may optionally be defined for a contract; a percentage
defining the total accumulative retention percentage allowed for a contract.
Adding additional applications once the maximum retention is reached will not
automatically create or release any further retentions.
In
certain situations, there is also a need to define different retention
percentages by
items. This could typically be high value or high risk items that should not
follow the default retention on the contract. Should such an item retention
percentage be
defined, it will still fall under the contract maximum retention and the total
retention cannot exceed the maximum retention defined on the contract.
When applying for payment, the application will calculate retention for each
item by distributing the total accumulated retention proportionally across the
items. In situations where the required item retention amounts should be
different from the general rule set on the contract you will be allowed to
override the calculated retention value manually. With the assumption that there
will be no need to apply for a different retention amount when submitting the
application, and that the contracted retention percentage will be used when submitting
application, it will only be possible to override the certified retention
amount.