Blight of Retentions Holding Back Contractors

A recent trade survey has found that nearly a third of engineering services contractors have up to 10% of their turnover locked up in retentions.

If you are a contractor in the construction or engineering industry, you’ll be familiar with the concept of retention. This is the proportion of money that the client holds back, in case they need to use it to persuade corrects to defects or changes to the groundwork.

The survey, conducted by trade bodies BESA, ECA and SELECT, reported that six in ten firms had a “substantial” portion of their turnover held up by firms further up the supply chain.

Industry leaders have called for changes to be made, and hopes the government will take action.

Trade bodies are urging for reform, and Newell McGuiness at SELECT calls retentions a “blight on the construction industry”. Furthermore both BESA Deputy CEO Bruce Kirton, and ECA CEO Steve Bratt, fear the impact on small businesses.

“Retention sums are often withheld for longer than necessary and are often not repaid in full if at all. It is vital that changes are made to protect businesses from this archaic practice”, McGuiness further adds.

The three sector trade bodies have advocated that cash held in retentions by clients and main contractors should be held in trust, at the earliest opportunity.

Chris Shirley, Service Manager at CPA says “Here at CPA we have noticed a sharp increase in the number of retention cases being referred to us over the last two or three years. I’m pleased to say we have achieved our usual high success rate and helped resolve many outstanding queries. If your business is in the position of having your money sitting in someone else’s Bank account then give me a call on 0330 053 9263 or email cshirley@cpa.co.uk.”

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