How retainage is calculated
- Work completed to date = sum of (scheduled value × percent complete) for each line
- Retainage = work completed to date × retainage rate
- Payment due = work completed to date - retainage - previous payments
Retainage is held on the cumulative work completed, not just this period’s work, so it grows as the job progresses until it is released at substantial or final completion.
Worked example
A $400,000 contract is 45% complete overall, for $180,000 of work completed to date. Retainage is 10%, and previous payments total $117,000.
- Retainage held: $180,000 × 10% = $18,000
- Earned less retainage: $180,000 - $18,000 = $162,000
- Payment due this period: $162,000 - $117,000 = $45,000
Common retainage rules to check in your contract
- The rate - 5% and 10% are the most common.
- Whether retainage drops (for example from 10% to 5%) once the job reaches 50% complete.
- Whether retainage applies to stored materials as well as installed work.
- When it is released: substantial completion, final completion, or after closeout documents.
- State limits - many states cap retainage, especially on public projects.
Frequently asked questions
Is retainage calculated on the total contract or on work completed?
On work completed (and often stored materials) to date, not the total contract value. It grows as the job progresses.
What is a typical retainage percentage?
Usually 5% or 10%, set by the contract. Some contracts reduce it partway through the job, and some states cap it, particularly on public work.
Is the retainage calculator free?
Yes, it is free without an account. DrawTrack Pro saves each draw per project so previous payments carry forward automatically.