Withholding Funds During Construction

Holdback, retainage, and withholding are all terms used to describe monies withheld from the Contractor by the Owner. In Ontario, holdback is legislated as a percentage of the progress of work, and is intended to protect employees on a project site.

Many contracts also include special funds, and I have given them a different name to avoid confusion. In Canada I tend to use the term retainage for sums that are withheld at the discretion of the owner or consultant. Retainage (or non-legislated holdback amounts) are typically lump sums used to cover the costs of deficiencies, or for the remediation of unaccepted work.