Retention, explained for subcontractors

Retention is one of those things in construction that everyone deals with and nobody explains. It's money you've earned but haven't been paid — held back on every claim, released long after you've left site. Handled loosely, it's the difference between a profitable job and a cashflow hole.

What retention actually is

Retention is a percentage of each progress claim that the head contractor holds back as security — typically around 5% — until the work is proven. It protects them if defects show up. It also means a slice of your margin is sitting in someone else's account for months.

There are usually two stages of release: half at practical completion, and the balance at the end of the defects liability period.

How it shows up on a claim

A progress claim isn't just "here's what I did." It's a running calculation:

Work completed to date — the cumulative value of everything done so far
Less previously claimed — what you've already been paid for
Less retention held — the percentage withheld this period
Net payable — what actually lands in your account

Miss the retention line and your claim looks bigger than the cheque will be. Track it properly and there are no surprises at the bottom.

Why it wrecks cashflow if you let it

Retention is invisible until you need it. It accrues quietly, claim after claim, and by the end of a big job the held amount can be serious money. If you're not tracking what's held against each job — and when each tranche is due for release — it's easy to forget to claim it back. That's your margin, left on the table.

Keep it visible

The subs who stay ahead of retention do three things:

Show it on every claim. Held this period, held to date — right there, not in your head.
Track release dates. Practical completion and end of defects liability, per job.
Claim retention release like any other claim. It's owed to you; treat it that way.

Retention isn't a tax. It's your money on a delay. The job is to never lose sight of it.