Skip to main content
Skip to main content

💵 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​

ApplicationBilledRetention (5%)PaymentRetention 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 OrderAmountRetention (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​

  1. Negotiate lower rates — 5% instead of 10%
  2. Request early reduction — At 50% complete
  3. Retention bonds — Replace cash retention with a bond
  4. 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.

Interactive Calculator​

Typical: 5-10% (private), 5% (public)