We have an ECC contract incorporating options X5 (sectional completion) and X16 (retention). There are four sections defined and the retention percentage is 3%, with nil retention-free amount. Three of the four sections defined are complete and in use by the employer. At present, one half of the retention has not been released in respect of the three completed sections. Retention is therefore currently held at 3% on the full value. The contractor is of the view that one half of the retention applicable to the three sections completed should be released. The reason the retention has not been released is that clause X16.2 makes reference to the amount retained being halved at completion of the whole of the works. The whole of the works will not be complete until the final phase is complete so, until then, the retention remains at 3%. Clause X5.1 by reference to ‘unless stated as the whole of the works’ apparently excludes the application of the retained sum from each section. We think the contractor’s interpretation perhaps reflects provisions of other standard forms of contract, but what is your view?
Answer
It is completely irrelevant what any other contract says (or not) about retention – it is all about what your particular contract says and we cannot fault your interpretation. If you simply read the relevant provisions through with the contractor, the logical conclusion is that retention is not released for each section, only at completion of the whole of the works.