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2004 Update Retainage Provision - AASHTO Subcommittee On Construction

State Do you have zero retainage? If yes, is it for all projects? Explain. Were you zero retainage prior to the DBE regulation changes? If you were at zero retainage, have you had any problems with performance, sureties, payments, etc., that you can attribute to zero retainage? Discuss. Contact Person Telephone Number
AL Yes Yes, all projects. No No problems to date.
12/2004 Response: We've seen an increase in contractors wanting to dispute final quantities. Without retainage, there's really nothing for them to lose in spending a few weeks arguing.
Terry McDuffle 334-242-6208
AK (Blank)
12/2004 Response: Yes. (However,up to a maximum of 10% retainage may be withheld by the Engineer on progress payments if unsatisfactory progress is being made, however this clause is rarely used because our courts have held that the contractor may be entitled to interest on retainage.)
Yes, all projects. Yes. No. Gordon Keith
Chuck Correa
12/2004 Response: No change.
  No   Ron Williams
Julio Alzarado
AS Yes - Primes (FYI - Primes are allowed to hold up to 10% retainage on subcontracts.) Yes, all projects. Yes - Primes (FYI - Our specs permitted Primes to hold 10% on subcontracts prior to the DBE reg changes.) No, none that can be attributed to our not holding retainage.
12/2004 Response: Arkansas' response in the previous survey is still valid.
David B. Henning 501-569-2121
CA No. Caltrans contract provisions require retention
12/2004 Response: Yes, we chose Option A, no retention on Federal-aid contracts (only) and we prevent contractors from holding retention on their subcontractors.
*(No) Since the prime contractors have no leverage over the subcontractors, primes are requiring subs to have performance bonds. John McMillan
Gene Mallette
CO No, but we have zero retainage for subcontractors. CDOT withholds retainage only on work done completely by the Prime Contractor. There is no retainage held on work that is all or partially subcontracted, and the Prime Contractor is prohibited from withholding retainage on subcontractors. This provision applies to all projects.
12/2004 Response: No - We hold 3% of the Prime Contractors' payment until 1 ½% of the contract total is met. For subcontractors, in August of 2004 we began allowing Retainage again. The Contractor will negotiate this rate with his subs,(CDOT does not specify a percent). When a subcontractor has satisfactorily completed all work, they may make a written request to the Contractor to release the Retainage being withheld. The Contractor has 10 days to review the request, and if they agree, they have 7 more to release and pay withheld Retainage.
*(No) This provision was developed in response to the DBE regulation changes.
No, but we changed to zero Retainage for the subcontractors as a result of the DBE regulations. Although in August of 2004 we again began withholding Retainage as specified in previous column.
The Prime Contractors are complaining that with zero retainage, they have a hard time getting subcontractors to return to the job for repair or cleanup work at the end of the project, if they have already been paid for their work. They are also unable to get bonds from some of the smaller subcontractors, and thus say the specification increases their risk and liability for the subcontractors' work and financial obligations. Gary Self
Dean Van De Wege
CT No. At the present time, Connecticut withholds retainage at the rate of 2 ½ % until the project is accepted.
12/2004 Response: Still the same.
  *(No) As a result of the proposed DBE regulation revisions, if they are published as originally written, we will reluctantly change to zero percent retainage as we believe the other options are unworkable.No change made.   Arthur W. Gruhn
James Connery
DE No. We retain 5% and will continue to hold retainage until the federal regulations require otherwise. Our local road building contractors are pushing us to adopt a zero retainage policy now. We will wait and see what the final regs look like and make a decision at that point. The current draft includes several options on how to handle this situation. Non of them are attractive to DelDOT.
Yes, all projects.
No 12/2004 Response: Delaware has gone to zero retainage within the past year (I believe the first contracts bid that way were March/ April, 2004). This is for all contracts. We have not had any problems that I know of that can be directly attributed to the policy. Our contractors are also concerned that it will be difficult to get subcontractors back onto the site for punch list work. John Eustis
Natalie Barnhart
FL Yes Yes, all jobs. No. We held retainage in the past. We changed as of 7/1/01. We only hold retainage if a contractor is more than 10% behind their schedule. Too soon to tell. We do not foresee any problems. In Florida, the prime has to give us a monthly certification that says they are paying their subs their prorated share each month unless there is a dispute and then they have to list that sub on the certification saying that there is a dispute.
12/2004 Response: In Florida, the prime has to give us a monthly certification that says they are paying their subs their prorated share each month unless there is a dispute and then they have to list that sub on the certification saying that there is a dispute.
Gregg Xanders
Ananth Prasad
GA Yes Yes. We no longer hold retainage on any project. No No.
12/2004 Response: Taking longer to get punch lists completed and final paperwork submitted. Primes complain they have no leverage on the subs.
David Graham 404-656-5306
12/2004 Response: Yes. We have zero retainage for Federaly-Aid projects only. We withhold 5% of the amount due to the Prime for the first 50% of the total contract amount.
No No major problems yet, but we do see it is harder to have the contractors close the projects quickly, especially when the contractors are busy with multiple projects. Earl Kobatake
Lance Zhai
ID (Both) Idaho has either 100% progress payments with no retainage or 5% retainage per pay estimate. The contractor's bonding company generally is the one who approves 100% payment to the contractor. The majority of pay estimates to the prime contractor has no retainage. The contractor's surety has to furnish written consent for 100% payments.
12/2004 Response:
  • withhold whatever funds deemed necessary if the State's interests are insecure.
  • 5% from each progress estimate; or 100% progress estimates with consent of contractor surety.
(Both) The contract specifications have been in effect for many years.
No problems specifically. However, keep in mind that sureties generally do not pay off immediately if there is an unresolved problem between the state and contractor. Idaho, by contract language, has the right to withhold payment if the Engineer deems the state's interest is not secure.
It is sometimes difficult to get overpayments back from the Contractor if the final estimate shows that the contractor owes the State money. Eventually we get it back. (Response provided by Frances Hood.)
Gene Wortham 208-334-8426
IL No.
12/2004 Response: Yes. IL now has 0 retainage.
Yes, we use it on all projects even if no Federal Funds are involved. No   Gary Gould
Roger Driskell
IN Yes. 0% Retainage since July 1, 2001 We hold no retainage on all of our contracts, federal aid or state. No, we held 3%. The federal regulation initiated the statute change. This just went into effect so we have had no experience with it.
12/2004 Response: At this time, we can not attribute problems to zero retainage. Answer provided by Mike Beuchel.
Tim Bertram
Dennis Kuchler
IA No. We retain 3% on the first $1,000,000 for a total max. of $30,000. This has been in place for approximately 3 years. We have no plans on changing our retainage provision.
12/2004 Response: No changes.
*(No)   John Smythe 515-239-1503
KS Yes Yes, we use it on all projects. In general if required on Fed Aid Proj. we use the same on Kansas Funded Projects. No, we were in the process of going to zero retainage and the new requirements just pushed us along and moved it up approx. 6 months. We have had no problems. At the request of some prime contractors on striping projects either as prime or as sub-contractors we only pay for 90% of the material installed until 180 day acceptance period has run its course.
12/2004 Response: There are no changes needed to KDOT's earlier response.
Dean Testa
Dennis Weinrich
Same as above
KY Yes Yes Yes No
12/2004 Response: No changes.
Amos Hubbard
Jim Rummage
LA Yes Years back we gave the contractors a choice to either furnish us a retainage bond or we would hold retainage. All contractors now furnish us a retainage bond on all contracts. **(Yes) Performance bonds are another issue that we require, but have not had any problem with the retainage bonds other than the contractor quit putting pressure on the Project Engineer to complete the final estimate thus causing delays in closing out projects! The problem we have with the new DBE requirements is that our FHWA has stated that DOTD will determine when the contractor must release the retainage to the DBE.
12/2004 Response: No problems with retainage or performance bond. Answer provided by Mike Ricca.
James Little
Rick Holm
ME No   No   Thomas A. Doe
Scott Brickford
MD No, our retainage is currently 5%. We do have a criteria by which a contractor can request a reduction in retainage based upon our evaluation of their performance. If, for example they have maintained an "A" rating for the last two years and also on their current project, they can request a reduction to zero after they have completed 15% of the current contract. *(No) 12/2004 Response: As of this time, we have not occurred any problems with our specification. (DAVID BEAULIEU)

The retainage information for Maryland remains as it was in 2001. (Robert Harrison)

Steve McClain or Robert Harrison 410-545-0074
12/2004 Response: No Change.
No No No Michael McGrath 617-973-7610
MI No Not Applicable No Not applicable
12/2004 Response: The information listed for Michigan on the attached document is still correct.
Gian Taneja
Jason Gutting, P.E.
MN Yes All projects except retainage on landscape jobs where we retain for maint. and deductions for dead or failing plants. **(Yes) We've had zero retainage for between 15 and 20 years. We've had very little, if any problems over the years. We do retain as a "backsheet," items for unacceptable work, disincentives, erodable soils, prevailing wage shortfalls, etc. These are individual retainage items, and not blanket retainages.
12/2004 Response: No changes.
Mike Marttila
Gary Thompson
12/2004 Response: Yes, started in Jan. 04.All road construction projects are at 0%, for building projects we still use 5% or 10%
No. We were at 5% retainage but reduced to 1.5% after DBE regulation changes. Have not had any problems since we started using 0%, have added contract language to address over payments. Joy F. Portera
Brad Lewis
Same Number
MO Yes Yes, we depend on the contract bond. If the contractor gets in trouble on the project or fails to pay bills promptly, we can begin retainage. No No. Only in effect this year.
12/2004 Response: With retainage we were able to get contractors to finalize jobs, now we are having difficulty. (Answer provided by Brian Williams).
Kenneth Fryer
David Ahlvers
MT Yes Yes, we use the same computer payment system to make monthly estimates on all projects. No, we just went to zero retainage as a way to get our DBE program approved last July. We have an overpayment problem on some projects where the final estimates end up having a quantity change that results the Department having set up an account to get money back to the Department particularly if the overpayment payback is in a period of low cash flow to the contractor. The larger the over payment the more the contractors complain. Also we are having more problems getting the necessary paperwork e.g. material certifications from contractors at the end of the project because they have been paid all the money that is owed them. The Department is going to go AASHTO SiteManager software for our field staffs and hopefully this will reduce substantially the amount of over payments because the pay quantities should not change from the monthly estimate to the final estimate. Even with zero retainage some contractors complain that our field staffs are not paying 100% of the quantities therefore we are holding a retainage on them even if the policy is no retainage.
12/2004 Response: Montana has prompt payment statutes that eliminate our ability to withhold retainage. The lack of retainage does not create major difficulties. Training and procedural changes have largely addressed the previous issues discussed above.
Gary Gilmore
Mark Wissinger
NE No (1% with a max. of $25,000.00) *(No) 12/2004 Response: No changes. Claude Oie 402-479-4532
NV No, by statute we are limited to the lesser of $50,000 or 5% of the contract amount. *(No) 12/2004 Response: No change in Nevada's retainage since the original survey. Mark Elicegui 775-888-7460
12/2004 Response: YES
Yes, all projects. *(No)
*(No) We withheld 5% of the final 50% of the contract in retainage. The recent change was as a result of the DBE program and the prompt payment changes.
  Jesse J. Dennis
Theodore Kitsis
Same Number
NJ No. We withhold 5% of the first 50% of the money due.
12/2004 Response: No Change.
N/A N/A New Jersey does withold 2.5% retainage (5% of the first 50% of the money due), however, we allow bonds placed in an escrow account for the amount of the retainage being held and we will then pay the retainage to the prime contractor. Mike Seigfried
David Sichik
NM No   *(No) 12/2004 Response: No changes. Lee Onstott 505-827-5631
NY 8/2001 No response
12/2004 Reponse: No. The provisions of our current NY Highway Law require us to withhold 5% retainage from all construction contract payments. We are currently attempting to go to zero retainage which will require legislative change. NYSDOT has drafted and submitted legislation to eliminate retainage, which is currently pending in the our Legislature.
No. N/A James Tynan
John Grady
NC Yes NC is not withholding retainage on Federal Aid projects only. *(No) We instituted a "zero retainage" policy due solely to the DBE regulation changes. To date we have not had any problems but it is too early to tell. We made the change last year so we have not had many projects (any?) that are nearing completion. It may be a year or so before we know the real effects.
12/2004 Response: We have not had any tremendous problems with this issue.
Steven DeWitt
Ellis Powell
Same Number
ND No. Currently 4% until project is 50% completed, then it is reduced to 2%.
12/2004 Response: The information provided on retainage in North Dakota is still correct.
*(No)   Cal J. Gendreau 701-328-2563
OH Yes Yes, all projects. Yes No problems at all.
12/2004 Response: No changes.
Bill Lindenbaum 614-466-3598
OK Yes Yes. In 1995, Oklahoma passed legislation that required the Department to eliminate retainage for all future construction projects. Yes We have incorporated an "overpayment Bond" to be included in all construction project contracts. We occasionally notice that contractors loose interest in completing exceptions noted at final inspections or punchlist items to totally complete the projects, possibly due to the fact that there are no monies left to be earned. Overall, it doesn't seem to have been too detrimental.
12/2004 Response: I reviewed the previous survey results and there are no changes necessary for the response from Oklahoma.
George Raymond 405-521-2561
OR No, we continue to withhold retainage funds. We have discussed going to zero retainage, but felt we could live with finaling our subcontractor work items if they request final payments - including retainage - prior to project closeout. We have not ruled out going to zero retainage if the current system does not work out. No N/A
12/2004 Response: No changes.
Ken Stoneman
Jeffrey Gower
PA Yes On all projects Yes No major problems. We do tend to have problems with contractors providing us with the necessary documents to close our projects. Retainage would probably give them more incentive to comply.
12/2004 Response: No changes.
Tucker Ferguson 717-787-6989
RI No   *(No) To the best of my knowledge, we have always withheld retainage. 12/2004 Response: Rhode Island has not changed the way retainage is withheld. The info in the survey is correct. Please see our standard specs located at http://www.dot.state.ri.us/ Norman P. Marzano, Jr. 401-222-2468 ext. 4312
SC Yes Yes, for all projects. No, we retained 5% up until 50% of the contract was complete and then it remained at that amount until completion of project. Have not had any problems to date.
12/2004 Response: We do hold retainage when liquidated damages are incurred and the delinquent or default status gets results if there are issues with the contractor.
Danny Shealy 803-737-1308
SD Yes Yes, we do not have retainage on any projects. Yes No.
12/2004 Response: Nothing has changed to this point.
John Forman 605-773-5155
TN No. We retain 3.5% as required by State Law; however, we are looking at actions we might want to take (zero retainage) for the next legislative session.
12/2004 Response: Tennessee DOT will go to zero retainage effective August of 2005, we had our state law changed to do this.
*(No)   David Donoho 615-741-2414
TX No, our retainage is 4% or 5% depending if recycled materials are used.   No 12/2004 Response: No changes. Thomas Bohuslav 512-416-2559
UT No N/A No N/A
12/2004 Response: No changes.
John C. ButterfieldDarrell Giannonatti 801-965-4111
12/2004 Response: Yes
Yes, for all projects as of January 2005.
No N/A Nate Danforth 802-828-2593
VA Yes Yes, unless the contractor falls more than 10% behind schedule or does not furnish a bond. No Not to date.
12/2004 Response: We have not had any significant problems to date.
Robert C. Edwards for C.F. Gee
Daniel R. Liston
WA No, 5%.
12/2004 Response: "Washington has a mandatory retainage law whereby we must retain 5% of all payments and hold that amount in trust until project completion and satisfaction of legal requirements (payments to workers and materialmen, taxes, fees and judgments). It is not a performance retainage in any respect. Our law does allow posting a retainage bond in lieu of cash deductions from payments. While we do not have zero retainage, we do require our prime contractors to refund to the sub all retainage associated with the sub's work upon completion of all of the sub's requirements in the contract. This payment is to be made by the prime from the prime's own resources even though the prime. The subcontractor full payment requirement is a standard specification (1-08.1(A)) and does apply to all jobs and to all subs.
We did not have this spec prior to the new DBE regulations.
Other than some initial grumbling from prime contractor management, we have had no problems with the specification. There has been no trouble with payments, sureties, performance, etc. that we can attribute to this provision.
Craig McDaniel
Kevin J. Dayton for Don K. Nelson
WV Yes, we have zero retainage with a 102% performance bond or 2% retainage with a 100% performance bond. Once contractors found out that the cost of a 102% bond is the same as a 100% bond they all have chosen that option. No Too early to say since zero retainage has been in place only 2 months. We are concerned about potential overpayments to contractors since it seems to take longer to get check from contractor. The other concern is that without retainage there is less incentive to final project.
12/2004 Response: Since the contractors are getting paid, they are not willing to work to get the punch list complete so we can get our federal reimbursement.
Robert Tinney
Mike Skiles
12/2004 Response: No Change.
  No   Donald Greuel 608-266-3979
WY Yes All highway construction projects starting with the October 2001 letting.Building is still 10%. No 12/2004 Response: No problems. We made two specification changes that give us the ability not to issue bid envelopes or approve subcontracts if they owe money to the department. Mark Eisenhart 307-777-4459
Totals from August 2001 Survey
48 States Resp. 20 Yes
27 No
1 Both (Idaho)
  8 Yes
39 No
1 Both (Idaho)
Totals from December 2004 Survey Update
50 States Resp. 29 Yes
20 No
1 Both (Idaho)

*(No) - Interpretation of data supplied.**(Yes) - Interpretation of data supplied.

Updated: 06/27/2017
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