The misunderstood life of retainage

Retainage - the percentage of each progress payment withheld until substantial completion - is a simple concept executed inconsistently. The contract might say 5% or 10%. A line might have retainage reduced after reaching 50% complete, or waived entirely for certain trades, or capped once a cumulative dollar threshold is met. The G702 has a field for it. Most reviewers glance at it and trust the number.

Where the errors live

The first error is the blended rate: the ratio of total retainage to total work completed on the G702 front page should match the rate specified in the contract, within a reasonable tolerance. When it drifts by more than half a percentage point, something is off - either a line is carrying the wrong rate, a subcontractor is being withheld at a different percentage than the GC, or the retainage reduction threshold was applied inconsistently across the schedule of values.

Retainage errors don't surface at certification. They surface at closeout, when someone finally reconciles the holdback and discovers the GC withheld $4,200 more than the contract allowed across a year of applications.

Why it's worth automatic scrutiny

The math isn't hard - multiply each line's new work by the contract rate, check that the sum matches the G702 total, repeat across every application. The volume is what kills you. On a project with eighty line items and twelve applications to date, that's roughly a thousand individual retainage calculations to verify. No human does that every month. A computer does it in the time it takes to render the page, and flags the one discrepancy worth a phone call.