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Construction Retainage
Retainage costs everyone in the construction industry from the owner to the contractors and to the suppliers on any project. The "holdback" of 10% in most cases is a drag on cashflow and thus, keeps cost higher for the job than it should be.
The question is "what is a smarter way for a contractor to approach retention?". Here is our answer: Approach it like a creditor. If you do, then you realize may be a bargainin chip with the client.
First, let's ascertain the cost of retention -
1) Cost of money
2) Opportunty Cost
3) Risk of not getting paid
The complete article is contained in our new book published by McGraw Hill, Managing a Construction Firm on Just 24 Hours a Day (406 pages).
This and other management information are part of our 400+ page book published by McGraw-Hill Inc. "Managing a Construction Firm on Just 24 Hours a Day". It includes 170 best Practices Used in Construction Contracting with over 100 illustrations and examples. We include a CD of 60 Excel Templates when you buy the book from our website. We also include our library of forms and 10 online courses.
See our secure Miva / EarthLink bookstore: http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=BCF24
Go to any major bookstore for a copy or see our website above.
Take our Free Sample E-learning course for construction. Go to constructioncbt.com
Matt Stevens is a management advisor who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.">mstevens@stevensci.com.
search terms: Pre-construction, post-mortem, lessons learned, Managing a Construction Firm, Profit Strateg, Estimating, Project Manage, Accounting, Bidding, Pricing, Labor Rates, Financ, Retention
Posted by Matt Stevens at September 5, 2008 9:11 PM
Comments
I am a student of unitec, Iam currently working on an essay about retentions,
i would like it, if you have time, to send me your thoughts or all the information you have on construction retainage, also info on the following:
Does the use of retentions garenty performance?
Can/Does the use of retentions display a positive/negative attitude from sub contractors?
Can retentions affect relationships and moral so much, that the actural construction is effected?
What are the positive/negative effects of the use of retentions?
Are we as Contractors insulting the subcontractors intentions through the use of retentions?
Posted by: Ben Price at March 19, 2006 10:10 PM