What is a common retainage range used in many construction contracts?

What is a common retainage range used in many construction contracts?

• A. 1-2%
• B. 3-4%
• C. 5-10%
• D. 15-20%

Answer: (C)

Retainage is money withheld from progress payments in a construction project to protect the owner and ensure work is completed and any issues are resolved. A common practice is to hold back about 5-10 percent of each payment. This range provides enough leverage to cover punch-list items, ensure final clarity on liens and waivers, and encourage timely completion, while not crippling cash flow for the contractor. Final retainage is typically released after substantial completion and the project owner confirms all requirements are met. Although some contracts use smaller or larger percentages, 5-10 percent is the standard range in many construction agreements.

Retainage is money withheld from progress payments in a construction project to protect the owner and ensure work is completed and any issues are resolved. A common practice is to hold back about 5-10 percent of each payment. This range provides enough leverage to cover punch-list items, ensure final clarity on liens and waivers, and encourage timely completion, while not crippling cash flow for the contractor. Final retainage is typically released after substantial completion and the project owner confirms all requirements are met. Although some contracts use smaller or larger percentages, 5-10 percent is the standard range in many construction agreements.