What Is Retainage in Construction?

How much is being held back, and when do you actually get it?

Retainage is a percentage (typically 5 to 10%) withheld from each progress payment and released after substantial completion.

What it is

Retainage is the portion of each pay application the owner holds back instead of paying in full, as security that the work will be finished and finished right. It is usually 5 to 10% of each draw, accumulates over the life of the job, and is released on a schedule tied to substantial completion and closeout.

Why it matters

Retainage is often the entire profit margin sitting unpaid. On a long job it ties up real cash, and if it is tracked in a spreadsheet separate from the pay app, the held amount drifts from what was actually withheld. Getting it released on time depends on having the completion proof and lien waivers in order.

How it works

1. Withhold per the contract

   Each pay app withholds the contract retainage percentage from the billed amount.
2. Accumulate across draws

   The held amount grows every cycle; the running total has to match the sum of what each draw withheld.
3. Trigger release at substantial completion

   Substantial completion starts the release schedule; some contracts reduce retainage partway.
4. Release against closeout

   Final retainage releases after punch closeout, lien waivers, and any warranty requirements are met.

Common mistakes

How Scaftra handles it

Scaftra computes retainage as part of the pay application workflow: it is withheld per the contract on each draw, accumulates against the schedule of values, and the release rides the same workflow tied to substantial completion and lien waivers. The held amount always matches the billing because it is derived from it, not maintained separately.

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