Which of the following best describes retainage in construction contracts?

Retainage in construction contracts is a practice where a portion of the payment, typically a percentage, is withheld until the project is completed satisfactorily. This ensures that contractors have an incentive to finish the work properly and addresses any potential issues that may arise during the final stages of a project. By retaining this percentage, clients protect themselves against incomplete or unsatisfactory work, ensuring that all aspects meet the specified requirements before the final payment is made.

This practice is common in the construction industry to promote accountability and quality, as it aligns the interests of both parties—the owner wants a completed project that meets expectations, and the contractor wants to secure their full payment. Thus, option B accurately reflects the nature and purpose of retainage in construction contracts.