On most construction contracts the client does not pay the full value of each claim. A percentage is held back, the retention, and kept until the end of the job. It protects the client if the contractor leaves defects unrepaired.
For a contractor, retention is your money sitting in the client’s account, often for well over a year. Knowing exactly how much is held, and claiming it back on time, makes a real difference to cash flow.
How retention works
- The rateA percentage of each certified amount is held back. Many Malaysian contracts use 10%, some use 5%. Your contract states the rate.
- The limitRetention stops once it reaches a limit, commonly 5% of the contract sum. After that, claims are paid without it.
- First releaseUnder standard forms such as PAM and JKR, usually half of the retention is released when the works are practically complete.
- Final releaseThe rest is released at the end of the defects liability period, once the defects are put right and the certificate is issued.
- Your contract decidesRates, limits and release stages vary. Subcontracts often follow the main contract, but not always. Read the retention clause before you price.
How to use the calculator
- Enter the contract sumAnd the retention rate and limit from your contract.
- Enter each certified amountOne row per claim. The calculator holds back the rate until the limit is reached.
- Read what is heldThe running total shows how much of your money the client is holding.
- Plan the releasesHalf at practical completion, the balance after the defects period, or the split your contract states.
- Claim it back on timeWrite to the client for each release. Retention that is not asked for is often paid late.
Do not lose track of your retention
- Keep a running total per job. Many contractors only find out what is held when the job closes.
- Diarise the dates. Note the practical completion date and when the defects period ends, so the release request goes out on time.
- Release is not a new claim. Ask for the retained amount on its own, with the certificate, not mixed into a progress claim.
- Check the subcontract. If you are a subcontractor, find out when the main contractor gets its retention back and whether yours follows.
Do it in Raul instead
In Raul, type the percentage held back on each invoice and an optional limit as a percentage of the contract. Every new invoice on the job then holds it back for you.
See retention in Raul- Press Release retention and the form shows what is held back so far, what was released before and what is still held.
- The release is an invoice of its own, not a new claim.
- Raul can print the retention release request letter with your bank details and file it in Documents.
Common questions
What is a retention sum in construction?
A retention sum is the money a client holds back from each progress payment as security for the contractor finishing the work and repairing defects. It is paid back in stages at the end of the job.
How much retention is held in Malaysia?
Commonly 10% of each certified amount, up to a limit of 5% of the contract sum, but your contract sets the actual rate and limit.
When is retention released?
Under many standard forms, half is released at practical completion and the balance at the end of the defects liability period, once the defects are put right. Check your contract.
Can a subcontractor claim retention?
Yes, retention held from a subcontractor is still the subcontractor’s money and should be released as the subcontract states. Check the subcontract terms.