About Calculating and Distributing Claim Retention

You can calculate and distribute retention for a subcontract claim in SL Subcontract Claims.

Once you select the subcontract claim (in SL Subcontract Claims), you can calculate and distribute claim retention,by selecting File > Calculate and distribute claim retention to claim items. The system calculates and distributes the retention on the claim based on the work complete retention percentage entered on each subcontract item included on the claim.

Note: This will reset any manually entered retention amount in the Certified Retention/Approved Retention field on the Info tab or Items tab.

There are two uses for this option:

  • Reset manually entered retention on the claim - For example if you manually entered retention on the claim using the Approved Retention field on the Info tab, but you would like the retention to be calculated using the work complete retention percentage entered on each subcontract item included in the claim, use this option to reset the manually entered retention and restore the default values.
  • Calculate and display retention on new claim items - For example if you are on the Items tab and have just added a subcontract item to the claim, you can use this option and then click the Refresh icon at the top of the form. The calculated retention will display in the Approved Retention fields on the Items tab.

When you enter Approved Amounts for each subcontract item on the Items tab, the system calculates retention on the entire claim and displays it in the Approved Retention field on the Info tab.

This field is calculated in the following way:

  • Calculate retention on each subcontract item - Retention % on the subcontract item * Approved amount on the subcontract item.

    The retainage percent is defined for subcontract items when they are created in SL Subcontract Entry using the Work Complete Retainage % field (Info tab). The retainage percent defaults based on the phase associated with the subcontract item.

  • The diagram below outlines how the system selects a default retainage percentage when the subcontract item is created.

    The approved amount is entered on a subcontract item using the Approve Amount field on the Items tab of the SL Subcontract Claims form. This field will default based on the calculated value in the Claim Amount field.

  • Total the retention on the subcontract items
  • Apply maximum retention - If a maximum retention was set up on the subcontract (SL Subcontract Entry> Maximum Retention Settings tab), it will be applied. For an overview on maximum retention, see About Subcontract Maximum Retention Amounts.
Note: If you selected the Enforce Catch Up check box on the SL Company Parameters form, retention on the claim is calculated differently. For more information, see Enforce Catch Up.

What happens when you change the retention amount?

If you change the approved retention on the claim, the system updates the approved retention on the subcontract items included on the claim (SL Subcontract Claims, Items tab).

If you reduce the approved retention on the claim, the retention on the subcontract item with the highest item number is reduced. For example:

Before After
Approved retention on claim = $20,000 Approved retention on claim = $15,000
Item #1 $2,500 Item #1 $2,500
Item #2 $7,500 Item #2 $7,500
Item #3 $10,000 Item #3 $5,000

If the retention on the highest subcontract item is not large enough to cover the entire reduction, the retention on the next highest subcontract item is reduced.

The example below illustrates what would happen if you changed the approved retention on the claim from $20,000 to $5,000.

Before After
Approved retention on claim = $20,000 Approved retention on claim = $5,000
Item #1 $2,500 Item #1 $2,500
Item #2 $7,500 Item #2 $2,500
Item #3 $10,000 Item #3 $0

If you increase the approved retention on the claim, the retention on the first subcontract item is increased.

For example:

Before After
Approved retention on claim = $20,000 Approved retention on claim = $30,000
Retention Approved Amount Retention Approved Amount
Item #1 $2,500 $50,000 Item #1 $12,500 $50,000
Item #2 $7,500 $150,000 Item #2 $7,500 $150,000
Item #3 $10,000 $200,000 Item #3 $10,000 $200,000

If the increase is greater than the approved amount on the first subcontract item, the retention on the next subcontract item will be increased, and so on. The approved amount on the subcontract item is the approved amount on the current claim, not the claim to date approved amount.

Note: The approved retention on the claim cannot be greater than the current approved amount on the claim. An error message displays if this occurs.

If you increase the approved amount on a claim and it exceeds the total retainage allowed for the subcontract (as defined by the maximum retention set up on the subcontract in SL Subcontract Entry, Maximum Retention tab), the system displays a warning. You can still save the claim, but "Max Retainage limit has been exceeded" will display next to the Retainage Remaining field in the Subcontract Details section at the top of the form.

For more information about maximum retention, see About Subcontract Maximum Retention Amounts.