The purpose of retentions: a review of the existing literature

Abstract

Retention is a phenomenon practiced in the construction industry for well over a century. It is a contractual mechanism whereby a portion of money, due to the contractor/subcontractor is held back till the completion stage of the project. Half of it is released at the time of practical completion and the other half is released at the end of the defects liability or the maintenance period. Some countries have abolished this practice, others have tried to outlaw the practice but failed. Yet others seem to be content with the ongoing practice and find it useful, which is why it is important to understand as to why it is so. To achieve this objective it is first of all important to understand the ‘purpose of retentions’ or why are retentions used in today’s construction industry even though the industry has undergone radical changes in the past century or so. A review of the current literature suggests that retentions exist for a variety of purposes. Hence there seems to exist some form of disconnect between the actual and the intended purpose of retentions. Perhaps it is important to understand whether retentions are actually serving the purpose they are set up for. In this paper the author through an extensive literature review has identified a number of purposes of retentions. Data has been collected from 27 publications including books, journal articles, magazines, reports etc. Ten main purposes/themes have been identified from the data. A matrix has then been formed with the purposes on one axis and author/publication on the other. This has been done to find out what most authors/publications have said regarding the purpose of retentions. Having found the numbers with the help of the matrix the purposes are numbered in the order of most recurring to the least recurring. The top three purposes of retentions are found to be performance security followed by defect rectification and motivation for early or timely completion.