Retainage is a percentage of completed job payment held back by the owner to ensure proper job completion. What is this percentage typically?

Retainage is a common practice within the construction industry, serving as a financial incentive for contractors to complete the project satisfactorily. Typically, the percentage of retainage withheld is around 10% of the completed work. This standard percentage is widely accepted because it strikes a balance between providing the contractor with enough funds to cover ongoing costs while also ensuring that they are motivated to finish the job to the owner’s specifications.

Higher percentages, such as 20%, 30%, or 50%, could significantly hinder cash flow for contractors and may discourage them from taking on projects in the first place. Therefore, the 10% retainage figure effectively protects the owner’s interest while supporting the financial health of construction contractors throughout the project.