H&V News has published its retentions survey, and the results make for sobering reading.
The survey asked six questions:
- Please indicate your estimated annual turnover
- Over the 5 years from 1.01.2008 to 31.12.2012 please estimate the amount of retention monies lost as a result of the insolvency of a main contractor or client. [If a client has gone into insolvency the likelihood is that the main contractor will not release your retention.]
- Over the same period please indicate the percentage of your sub-contracts/sub-sub-contracts on which cash retentions were not deducted
- Please indicate whether the bulk of your lost retention monies were on public sector works (e.g. schools, prisons, hospitals) or on private sector works
- What is the average length of time (from practical completion or hand-over of your works) stipulated in your sub-contracts/ sub-sub-contracts for the release of the final half of your retentions?
- What is the percentage of retention usually deducted?
The most interesting result is that the answer to question 4 was overwhelmingly private sector works (65%). Perhaps this is an indication that public sector clients are more diligent to ensure that retentions are released through the supply chain, or perhaps it’s a consequence of insolvency of the private sector client before the end of the retention period.
We wait with interest to see how the issue develops with respect to project bank accounts.