Retention: what is held back and when it comes out

Retention is the sum the respondent is entitled to hold from each payment as security against defects and non-completion. On a Singapore contract it is deducted from the certified gross value on every payment claim, and it is released in stages set by the contract. The trap is that release does not happen on its own.

How it accrues

Each cycle, retention is deducted at the contract percentage from the gross valuation, usually up to a capped limit. So the amount held grows as the works proceed and then plateaus once the cap is reached. The figure that reaches the payment claim is the certified value less retention less what has already been paid.

• The rate, the percentage deducted from each valuation, set by the PSSCOC or SIA conditions or the particular terms.
• The limit, the cap beyond which no further retention is held.
• The release stages, the points at which part of the held sum falls due back to the contractor.

Release in two moves

Retention typically comes out in two stages. A first portion is released at completion, when the works are taken over. The balance is released at the end of the defects liability period, once outstanding defects have been made good. Each release is a fall in the retention held, which lifts the amount due on the next payment claim.

That is where money goes missing. The second release sits months after the site has gone quiet, long after attention has moved to the next job. If nobody claims it, the respondent has no reason to volunteer it.

Inside the SOP Act cycle

A retention release is claimed through the ordinary payment claim mechanism, so it carries the same response window and the same due date as any other cycle. If the release is claimed and not answered in a valid payment response, the claimant has the same route to adjudication under the SOP Act as for any other unpaid sum.

The record that gets it back

Keep a running retention account: held to date, released at completion, balance outstanding, and the date the defects period ends. When that date passes, the release goes into the next payment claim as a line the respondent has to answer. The contractors who lose retention are not the ones who were refused it. They are the ones who never claimed it.