What term describes the percentage of progress payments withheld from the contractor until project completion?

The term that describes the percentage of progress payments withheld from the contractor until project completion is retainage. Retainage is a common practice in construction contracts where a portion of the contract amount is withheld by the project owner or general contractor to ensure that the contractor has an incentive to complete the project satisfactorily. This withheld amount is typically released to the contractor upon the completion of the project or once certain milestones are achieved, ensuring that all work is completed to the satisfaction of the owner and any contractual obligations are met.

This practice helps protect the owner from potential issues related to poor performance or incomplete work by the contractor. Retainage is often a standard percentage of each progress payment, commonly ranging from 5% to 10%, depending on the contract terms and local laws. Understanding retainage is important for contractors as it affects cash flow and project budgeting. The other terms—escrow, deposit, and down payment—do not specifically refer to the withholding of payments based on project progress and completion. Instead, they relate to different aspects of financial arrangements in contractual agreements.