What is the proper remedy for releasing retentions tied to the subcontractor's work rather than waiting for substantial completion of the entire job?

What is the proper remedy for releasing retentions tied to the subcontractor's work rather than waiting for substantial completion of the entire job?

• A. Tie the release of proportional retentions to the completion of the subcontractor's work
• B. Release all at substantial completion
• C. Release on final payment
• D. Withhold until defect correction

Answer: (A)

Releasing retainage as the subcontractor completes their portion of the work matches payment to actual progress. When a subcontractor finishes their scope, proportionally release the portion of the retention tied to that work. This acknowledges earned value, supports the subcontractor’s cash flow, and reduces disputes over payment timing, while still allowing the contractor to hold back a portion of retention for remaining work and any future defects or warranty issues. Why this fits better than the others: waiting until the entire project is substantially complete delays payment for work already finished, which can harm subcontractor cash flow. Releasing only at final payment defers funds that have already been earned. Withholding until defect correction is about post-completion remedies, not about aligning retention release with the completion of each subcontractor’s scope.

Releasing retainage as the subcontractor completes their portion of the work matches payment to actual progress. When a subcontractor finishes their scope, proportionally release the portion of the retention tied to that work. This acknowledges earned value, supports the subcontractor’s cash flow, and reduces disputes over payment timing, while still allowing the contractor to hold back a portion of retention for remaining work and any future defects or warranty issues.

Why this fits better than the others: waiting until the entire project is substantially complete delays payment for work already finished, which can harm subcontractor cash flow. Releasing only at final payment defers funds that have already been earned. Withholding until defect correction is about post-completion remedies, not about aligning retention release with the completion of each subcontractor’s scope.