About Claim Retention Calculations

Each subcontract item on the claim is given equal weight, regardless of the total subcontract item amount, or the amount of the current claim. See the diagram below for an example.

WC Retention % on Item

Total Subcontract Item Amount

Current Claim

Approved Amount

Item #1

10%

$100,000

$15,000

Item #2

5%

$1,500,00

$375,000

Calculated Retention %

7.5%

Example #1 - Multiple subcontract items with different retention percentages

If there are several items on the claim with different retention percentages and the approved amount on those claim items is different, the average calculated retention percentage will be applied to the entire claim amount and then assigned to each subcontract item on the claim.

In the diagram below, the system calculates retention by applying the 7.5% to the entire claim amount ($390,000), and it comes up with $29,250 for the retention on the claim. When the system assigns this value to specific subcontract items on the claim, Item #2 is calculated using the default WC retention % on the subcontract item (in this case %5), and the remaining amount is assigned to Item #1.

WC Retention % on Item

Total Subcontract Item Amount

Current Approved Claim Amount

Calculated Retention on Items

% Approved Retention

Item #1

10%

$100,000

$15,000

$10,500 (29250-18,750)

70% (10,500/15,000)

Item #2

5%

$1,500,000

$375,000

$18,750 (5% X 375,000)

5%

* The 5% is the default work complete retention percentage on the subcontract item

Totals

7.5%

$1,600,000

$390,000

$29,250

7.5%

If the Enforce Catchup box is not checked

Retention is calculated at the item level, not at the claim level. The diagram below outlines the retention amounts if the Enforce Catchup box is not checked.

WC Retention % on Item

Total Subcontract Item Amount

Current Approved Claim Amount

Calculated Retention on Items

% Approved Retention

Item #1

10%

$100,000

$15,000

$1,500

10%

Item #2

5%

$1,500,000

$375,000

$18,750

5%

Totals

7.5%

$1,600,000

$390,000

$20,250

If the approved claim amount on Item #1 is not large enough to cover the remaining retention, the remaining retention is added to Item #2.

WC Retention % on Item

Total Subcontract Item Amount

Current Approved Claim Amount

Calculated Retention on Items

% Approved Retention

Item #1

10%

$100,000

$15,000

$15,000 (entire amount of the claim)

100%

Item #2

5%

$1,500,000

$750,000

$43, 375 ((5% X 750,000)+ amount carried over from Item #1)

5.65%

Totals

7.5%

$1,600,000

$765,000

$57,375

7.5%

Example #2 - A claim item with 0% retention

The diagram below outlines how the system will calculate retention if you have an item on the claim that has a work complete retention percentage of 0.

WC Retention % on Item

Total Subcontract Item Amount

Current Approved Claim Amount

Calculated Retention on Items

% Approved Retention

Item #1

10%

$100,000

$15,000

$15,000

100%

Item #2

0%

$1,500,000

$450,000

0

0

Totals

10%

$1,600,000

$465,000

$15,000

The system calculates a 10% average retention on the claim, and then applies it to the total current approved claim amount, not just to the claim that should include retention. This means that the calculated retention on the claim is $46,500 ($465,000 X 10%). Since this amount is larger than the approved claim amount on Item #1 (the only item that includes a work complete retention percentage), the entire approved claim amount on Item #1 is retained.

The $15,000 calculated retention on the claim is larger than the 10% X $100,000. This means you will also see a (-$5,000 in the Retainage Remaining total at the top of the form under the Claim Number field.

The setting in this box only determines the default approved retention on the claim and claim items. If the calculated approved retention is incorrect, you can manually change it using the Approved Retention field on the Info tab on the SL Subcontract Claims form.

SL Claims - Overview