rough % for retention fee for building work?

Grimbal

Is there a rough rule of thumb to calculate what sort of % one should retain for building work ? The builder we'd like to take on is offering 2% to be paid upon building regs final sign off & a further 2% to be paid after 8 weeks of occupancy.

Does that sound acceptable?

TIA

ormus

depends on the size of the build.
we used to keep a 5% retention for 13 or 26 weeks, on the larger projects.
we were in ME engineering and had to use builders for various projects.
fairly standard formula in the construction trade.

keystone

Grimbal wrote: »

Is there a rough rule of thumb to calculate what sort of % one should retain for building work ? The builder we'd like to take on is offering 2% to be paid upon building regs final sign off & a further 2% to be paid after 8 weeks of occupancy.

Does that sound acceptable?

TIA

Agree with Ormus abouit size of build but I'd not fight him over 1% (difference between what builder is requesting and what Ormus suggests.) as it isn't worth an argument.

At least he is offering a contractual retention which is good.

Is the final 2% to cover snagging?

Cheers

withabix

5% is normal, or alternatively 10% on stage payments, upto an overall cap of 5% of the total.

This is released 50% on Completion and 50% after 12 months.

Depends how much you trust the builder and his workmanship.


On construction projects I'm involved in these days, where we regularly use the same subcontractors, we don't use retentions at all, because they are usually pointless - the cost of any defect would far exceed the retention anyway.

vaio

From memory on the JCT contracts there was a 10% retention on valuations with 5% being given at practical completion and the other 5% at the end of defects liability

Plasterer

5 percent is the norm

Grimbal

keystone wrote: »

Agree with Ormus abouit size of build but I'd not fight him over 1% (difference between what builder is requesting and what Ormus suggests.) as it isn't worth an argument.

At least he is offering a contractual retention which is good.

Is the final 2% to cover snagging?

Cheers

Yup, 2 % for snagging. As he explained it, Building control are effectively signing off the "acceptability" of the build at each stage of the project, so it's not like we'll be paying him without an independent 3rd party getting involved anyway.

The contract is offered as staged payments, in arrears on specific goals attained. 2% is retained until buildings control give their final build sign off, and a further 2% after 8 weeks of habitation - for snagging points really as you said

Sounds like 4-10% is the norm, so at 4% (given he's been a trustworthy bloke on a very small project we've had him in for in the past) I think I'm ok with.