1. Field Name and Definition

Retention Monies refers to the portion of payment withheld by the principal or head contractor from progress payments as security for the satisfactory completion of construction work and rectification of any defects during the defects liability period.

This field appears on Payment Claims to identify:

• The total amount of retention currently held
• When retained amounts become due for release
• The calculation basis for retention deductions
• Any partial releases of retention already made

Including retention monies details ensures transparency in payment calculations and helps track when these funds should be released back to the contractor.

2. Legal Requirements

Statutory Framework

Under the Building and Construction Industry Security of Payment Act 1999 (NSW) ("the Act"), while retention monies are not specifically mandated as a separate field, they form part of the "calculated amount" of the payment claim under section 13(2)(a).

The Act requires payment claims to state the amount claimed, which inherently includes any adjustments for retention. Failing to properly account for retention can result in an incorrect claimed amount, potentially affecting the claim's validity.

Relevant Case Law

Consequences of Incorrect Completion

• Overstated claims: Failing to deduct retention may result in claiming more than contractually entitled.
• Invalid payment schedules: Respondents may issue payment schedules disputing the entire claim.
• Adjudication complications: Adjudicators may struggle to determine the correct amount payable.
• Loss of credibility: Systematic errors in retention calculations can damage commercial relationships.

3. Practical Guidance

Step-by-Step Instructions

1. Review the Contract: Locate retention provisions (typically in payment clauses), identify the retention percentage (e.g., 5% or 10%), note any caps, and check for staged release provisions.
2. Calculate Current Retention: Determine the total value of work completed, apply the contractual retention percentage, deduct any previously released amounts, and verify against any retention cap.
3. Identify Release Triggers: Note key dates or milestones such as practical completion, the end of the defects liability period, or other specific events defined in the contract.
4. Document Release Dates: Clearly state when retention becomes due for release, referencing the relevant contract clauses and any conditions that must be met.

Clear Presentation Format

4. Common Mistakes and How to Avoid Them

Typical Errors

• Omitting retention details entirely: Always include the section, even if to state "Nil retention applicable".
• Incorrect percentage application: Double-check contract terms, as different rates might apply to different work portions.
• Failing to track partial releases: Maintain a detailed ledger of all retention releases and reference payment certificates.
• Miscalculating release dates: Use actual certified dates, not estimates, and account for any defects affecting the release.

Best Practices

• Create a dedicated retention tracking spreadsheet.
• Cross-reference your calculations with the respondent's payment schedules.
• Update calculations with each new payment claim.
• Document any disputes regarding retention separately.

5. Risks of Not Including This Information

6. Examples

Standard Building Contract

Subcontract with Staged Release

7. Related Fields

Accurate retention calculations impact several other key areas of your payment claim:

• Amount Claimed: The final amount claimed must correctly reflect all retention deductions and releases.
• Calculation of Amount: Your workings should show retention as a clear, separate line item.
• Supporting Documentation: You may need to attach certificates that confirm milestones for retention release.
• Previous Payments: The history of payments should reconcile with the cumulative retention held.

8. Frequently Asked Questions