Retention is earned money you have not been paid

Retention is a percentage the payer deducts from the amount otherwise due on each payment claim and holds as security against defects. On a PAM standard form it is deducted from the gross value of work certified, up to a capped limit, and released in two stages. It is earned money, valued in the claim and then withheld, which is exactly why it gets forgotten. Nobody chases a figure they have stopped thinking of as theirs.

How it accumulates

Each valuation deducts retention from the gross figure before arriving at the sum claimed. The deductions build up cycle on cycle until the retention fund reaches its contractual cap. From that point the fund stops growing, but the money already held stays held until a release event arrives.

The two release points

Retention comes back in two moves, and both are tied to events, not to the calendar drifting past.

• At practical completion. A defined share of the held fund is released once the works reach the completion the contract recognises. This is the first half in the common arrangement.
• At the end of the defects liability period. The balance is released once the defects period expires and outstanding defects have been made good.

Each release should be claimed as a positive line in the payment cycle it falls due, and served like any other payment claim so the CIPAA machinery still protects it.

Why it goes missing

Because the triggers are quiet. Practical completion is celebrated, the defects period runs in the background, and the day it ends nothing happens unless someone raises a claim. Add a defects list that never quite gets signed off, and the final release stalls indefinitely. The held sum is real money, often the contractor margin on the job, sitting with a payer who has no reason to volunteer it.

The discipline

Record the retention held after every valuation, diary practical completion for the first release and the defects period expiry for the second, and treat each release as a claim to be served and answered. Money you stop tracking is money you have quietly gifted to the other side.