Financials & Cost

Retainage

Also known as: Retention

A percentage of each payment withheld until the work is substantially or fully complete, as security for performance.

Retainage (or retention) is the slice of each progress payment the owner withholds — commonly 5% or 10% — and holds until the work is substantially complete and closeout obligations are met. It's a financial incentive for the contractor to finish, including the unglamorous punch list.

Retainage flows downhill: the owner retains from the GC, and the GC retains from its subs. Getting retainage released is a real milestone — it's often a significant sum, and chasing it is part of a project manager's and project accountant's closeout work.

Related terms

Pay Application

A periodic invoice billing for the work completed to date, submitted against the Schedule of Values.

Substantial Completion

The milestone when the work is complete enough for the owner to occupy or use it for its intended purpose.

Closeout

The final phase of a project: finishing punch work and assembling the documents and approvals that hand the building over.

Lien Waiver

A signed document in which a contractor or supplier waives their right to file a mechanic's lien in exchange for payment.

From term to skill

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