Our church building project is coming to a close, and we have been advised that the last three per cent owed to the builder should not be paid for a year. Can you tell us more, please?
THE delayed last payment of about three per cent is commonly called retention, and the money is held for a year to ensure that everything is complete.
When all the works included in the contract with the builder are complete, the architect, acting as your project manager, will sign a “Certificate of Practical Completion”. This paper advises that the architect has gone through all the works outlined in the specification, and these are complete. Some “snagging” will have been undertaken — that is, checking for issues with the way the work has been completed — and the architect will have checked that these have been corrected before signing the practical completion.
Some issues may come to light only as time passes. Only with use will you find that locks are sticking, or lights are flickering; and items that should have a long life may inexplicably come apart, from cupboard doors to stones and mortar. These items will have to be reinstated before the retention is paid.
But some of us are quite pernickety, and might get into a heated debate with the builder about who should be covering these minor items. Are they wear and tear, or was it faulty material used in construction? It is helpful that, just as in the main works programme, your architect was your project manager. The retention should only be paid to the builder when your architect agrees that this is the case.
As you raise and list any building-project issues for the builder, ensure that you still communicate with the builder through your architect. If you believed that you should get legal redress over the incomplete or faulty works, the architect would be the professional who is consulted for advice and perspective. Since legal redress is excruciatingly expensive, you should depend on your architect to negotiate with the builder to get the best solution before then advising you to release the retention payment.
During the year before that retention is paid, the treasurer should ensure that it is safely held in the bank account and not dipped into for cashflow or other reasons. Like an advance payment for a ticket or event, that money is not really yours, as the builder has already done the work: it is held as a sort of deposit for things that might be wrong, but probably are not.
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