Retention Schedule Calculator
Calculate how much retention is held on your construction projects, when it will be released, and plan your cash flow around practical completion and defects liability periods.
Default: 5% of contract value ($0.00)
Retention in Australian Construction Contracts
Retention is a percentage of each progress payment withheld by the principal as security for defective or incomplete work. Under most Australian construction contracts (AS 2124, AS 4000, ABIC), 5% is retained from each payment up to a cap of 5% of the contract sum.
At Practical Completion, 50% of the retention is typically released. The remaining 50% is held during the Defects Liability Period (commonly 12 months) and released once all defects are rectified to the superintendent's satisfaction.
The Building and Construction Industry Security of Payment Act provides statutory rights for contractors to recover retention monies. Some jurisdictions (e.g., QLD, WA) now require retention to be held in trust accounts. Always check your contract terms and applicable state legislation.
Estimates only. Retention terms vary by contract and jurisdiction. Consult your contract and legal adviser. Learn about AP Automation
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Understanding Retention in Australian Construction Contracts
Retention (also called retention money or security retention) is a percentage of each progress payment withheld by the principal or head contractor as security against defective or incomplete work. It is one of the most common forms of security in Australian construction contracts, alongside bank guarantees and insurance bonds.
Under standard form contracts such as AS 2124, AS 4000, and ABIC MW-1, retention is typically held at a rate of 5% of the value of work completed, up to a maximum of 5% of the total contract sum. For example, on a $2 million contract, the maximum retention held would be $100,000. Once this cap is reached, no further retention is deducted from subsequent progress payments.
The standard release mechanism has two stages. At Practical Completion (when the works are sufficiently complete for the principal to occupy or use them), 50% of the retention is released. The remaining 50% is held throughout the Defects Liability Period (DLP) - typically 12 months - and released once the contractor has rectified all defects identified during that period to the superintendent's satisfaction.
Recent legislative reforms in several Australian states have strengthened protections for subcontractors regarding retention. Queensland's Building Industry Fairness (Security of Payment) Act 2017 requires retention money to be held in a project trust account. Western Australia's Building and Construction Industry (Security of Payment) Act 2021 introduced similar trust account requirements. These reforms aim to prevent retention money being lost when a head contractor becomes insolvent.
Cash Flow Impact of Retention
For subcontractors operating on margins of 5-15%, having 5% of every payment withheld can significantly impact cash flow. On a 12-month project worth $1 million, the subcontractor will have $50,000 tied up in retention that won't be fully released until 24 months after work commenced (12 months construction plus 12 months DLP). Understanding this timeline and planning accordingly is critical for construction businesses managing multiple concurrent projects.