Understanding retention in progress claims
On most construction jobs you don't get paid the full value of the work the moment you finish it. A small slice is held back by the client until the job is properly complete. That slice is called retention, and getting it right on every progress claim keeps your cash flow predictable and your paperwork clean.
What is retention?
Retention is a percentage of each progress claim that the client keeps as a kind of security. It's there to give the client confidence that you'll finish the work and fix any defects. Once everything is signed off, the held-back money is returned to you. It is your money — it's just released later than the rest.
Why is it held back?
From the client's side, retention is protection. If something needs putting right after handover, they have funds on hand to make sure it gets done. From your side, it's simply part of how the contract is structured — so the important thing is to track it accurately on every claim so you know exactly how much is owed and how much is still being held.
A worked example
Say you have a contract worth RM100,000 and you've completed 30% of the work this period. Here's how a single progress claim breaks down:
- Work done this period: 30% of RM100,000 = RM30,000
- Retention held at 10%: 10% of RM30,000 = RM3,000
- Amount certified on this claim: RM30,000 − RM3,000 = RM27,000
So you certify and invoice RM27,000 now, and RM3,000 stays held as retention. Note that contracts often cap the total retention held — commonly around 5% of the contract value — so once the cumulative amount held reaches that ceiling, no further retention is deducted on later claims even as the work continues.
How retention is released
Retention is usually returned in two parts. A portion is released at practical completion — when the work is handed over and accepted — and the remainder after the defects liability period ends, once any snags have been fixed. The exact split and timing live in your contract, so always check the terms for the job you're on.
How MORTAR handles it
MORTAR does the retention maths for you. You enter the contract value and the percentage of work complete, set your retention rate, and the app works out the cumulative figures — work done to date, retention held, and the net amount due on this claim — without you reaching for a calculator. It respects the retention cap so you don't over-deduct.
When you're happy with the numbers, you certify the claim and MORTAR converts it straight into a progress invoice for the certified amount. Your claim history stays consistent from one period to the next, so the cumulative totals always add up.
Want progress claims that calculate themselves? Join the MORTAR early list and stop doing retention by hand.