Retention

Retention is security taken in the simplest possible form: money earned but not yet paid. Each interim payment is reduced by the retention percentage, the withheld pool grows with progress, and release follows the contract's milestones — conventionally half at completion or takeover, the remainder after the defects liability period, when the contractor has fixed what the period revealed. Its logic is leverage: the contractor's own money is the bond that brings crews back for the punch list and the warranty repairs.

The alternative — a retention bond, exchanging the withheld cash for a bank or surety instrument — buys the contractor its cash flow back at the price of a fee, and buys the owner equivalent security on paper.

Retention's real cost lives down the payment chain, where the percentages compound: withheld by the owner from the contractor, and by the contractor from every subcontractor, often on harsher release terms — the deepest pockets holding the smallest firms' margins for the longest time. Late release, disputed release and release conditioned on paperwork nobody prioritises are endemic; in several markets, retention reform and trust schemes exist precisely because the pool too often outlives the project, the defects and occasionally the payer.