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What is sliding scale retention?

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 Note

flag-australia.png The sliding scale retention feature was designed for Procore users in Australia and New Zealand—where it is an industry-wide best practice and legally regulated standard—to assure contractors and subcontractors meet all of the job's contractual obligations. However, this feature is available to Procore Project Financials customers in all countries. 

 For Procore Customers in the United States

flag-us.png  When your company applies the 'Owners English' or 'Specialty Contractors English' point-of-view dictionary, you'll see different tool names and term changes in the user interface. Learn how to apply the dictionary options. 

  • To learn the differences: Show/Hide      

    • This table shows the differences in tool names (bold) and terms across the point-of-view dictionaries for Project Financials. These dictionaries are available in US English only. The default dictionary is designed for head contractors, which means that you will need to work with your Procore Administrator at your company and your Procore point of contact to access the other dictionary options. 

      Head Contractors

      English (United States) - Default

      Owners

      English (Owner Terminology V2)

      Subcontractors

      English (Speciality Contractor Terminology)
      Progress Claiming Progress Claiming Progress Billings
      Owner-developer Funding Owner-developer
      Owner/Client Owner/Client HC/Client
      Head Contract Variation Funding Variation Client Contract Variation
      Head Contracts Funding Client Contracts
      Revenue Funding Revenue
      Subcontract Contract Subcontract
      Subcontractor Contractor Subcontractor
      Subcontractor Schedule of Values (SSOV) Contractor Schedule of Values (CSOV) Subcontractor Schedule of Values (SSOV)

Answer

Sliding scale retention refers to the portion of a contract amount due that is withheld from a contracted party (the party doing the work) by the contracting party (the party paying for the work).  The amounts withheld are based on a set of variable standards defined in the contract's scope of work. It is an industry-wide best practice in Australia, as well as legally regulated, to assure contractors and subcontractors meet all of the job's contractual obligations. 

Example: Applying Sliding Scale Retention in Procore

Although the terms of the retention on your construction project's contracts will vary from contract to contract, below is an example to show how sliding scale retention is designed to work:

  1. Let's assume you are a head contractor who has executed a $400,000.00 subcontract with a heavy equipment operator.
  2. During the course of the project, you plan to make progress payments to the subcontractor. Per your agreement, let's assume you have an industry-standard contract that obliges you to deduct 10% of the amount due on each subcontractor progress claim until 5% ($20,000.00) of the original subcontract's value ($400,000.00) is held back.
  3. When 100% of the work on the subcontract's Schedule of Values (SOV) is complete, your agreement obliges you to release the first portion of the amount held back. In this example, you would want to release the first 2.5% ($10,000.00) of the original subcontract's original value ($400,000.00). 
  4. In six (6) or twelve (12) months after the first portion of the retention amount was released, your subcontract's terms require you to release the remaining 2.5% ($10,000.00) withheld from the subcontractor.