In the context of public works contracts, what is the maximum allowable retention percentage?

In the context of public works contracts, what is the maximum allowable retention percentage?

• A. 5%
• B. 7%
• C. 10%
• D. 15%

Answer: (A)

Retainage on public works contracts is the portion of each progress payment that the owner withholds to ensure the project is completed and to protect subcontractors and suppliers. The maximum allowed holdback in California public works is five percent. This cap balances giving the owner leverage to ensure performance with keeping cash flow manageable for the contractor and its subs. The withheld amount is usually released in steps as milestones are met and finally after project acceptance, subject to final conditions like lien releases and warranty periods. Higher percentages aren’t permitted under standard public works rules.

Retainage on public works contracts is the portion of each progress payment that the owner withholds to ensure the project is completed and to protect subcontractors and suppliers. The maximum allowed holdback in California public works is five percent. This cap balances giving the owner leverage to ensure performance with keeping cash flow manageable for the contractor and its subs. The withheld amount is usually released in steps as milestones are met and finally after project acceptance, subject to final conditions like lien releases and warranty periods. Higher percentages aren’t permitted under standard public works rules.