Project Retentions

Learn how to track and manage your contract retentions on projects

Updated on May 21st, 2024

Retentions allow you to track and manage your contract retentions on projects. They can be quickly set up when you first create a project.

AroFlo will track your retention amounts and show you how much you can claim both on Completion and after the Retention Liability Period.

What are Project Retentions?
A project retention amount is a portion of the total payment for a project the client holds onto until completion. Retentions help ensure that the contractor or service provider completes their part of a contract as agreed.

Example:
Richard is the project manager for a new development. His client requested a retention amount of 10% of the contract amount be reserved for a completion claim. Richard added that to the contract by taking the total project amount of $2.5 million and subtracting 10%, which comes to $250,000. Invoices that Richard raises as progress claims for the project will be for the full amount minus the retention. 

The completion claim amount is then added to a liability account, which can be drawn on when the client feels that the project has been completed as agreed, or a period of time has passed (generally 12 months). 

 

 

Set up retentions

To set up retentions for a project:

  1. Click the Retentions tab.
  2. The Project Value field is pre-filled with the approved value of the linked quote. If a quote is not linked to the project, you can manually update this field. If this value includes GST, click Inc GST to calculate the ex GST value.
  3. You can enter either a total dollar value in the Max Retention Value, or a percentage for the retention value in the Project Retention Margin % field.

    The Inv. Retention Margin % field can be used when the retention amount per invoice is different to the overall retention margin. This is especially useful when a contract requires a higher retention percent to be held from your invoices until the retention total amount is reached.

     
  4. Choose what values should be included to calculate the Retention value.

    Markups used on your project are included when the Project Value is pre-filled. Markups can be excluded by un-ticking Inc Markup.

    Every project stage is included in the retention value, however, you can exclude values which aren't linked to a stage. Simply untick Inc. No Stage.

    If the contract includes variations in the retention, select the Inc Variations checkbox to allow task variations to be included in retention calculations.

     
  5. Enter the Retention Period (no. of months). This is used to calculate the final date for retention claims based on the Project End Date.
  6. Save Retentions to proceed to the final setup step.

 

Retention fields and settings

Field
Description
Project Value Total estimate value of the project. Either automatically entered from the total value of all approved quotes in the project, or manually entered.
Recalculate

This button recalculates your Project Value and Max Retention Values based on the values from Approved and Accepted quotes being added to your project. This includes variations if Inc. Variations is ticked when you set up retentions.

What if I have processed invoices when I recalculate?

Your processed invoices will not have their retention value updated. All other statuses (including In Progress, Pending Approval & Approved) may have their retention value adjusted if necessary.

 
Inc No Stage Indicates if the values found under 'No Stage' will be part of the Project value.
Inc Markup Indicates if markups were used towards calculating the Project Value.
Inc Variations Indicates if the retention calculation should include any Task Variations for the Project.
Inc GST Indicates if the Project Value was manually entered as including GST.
Max Retention Value

Total value of the Retention. If a value is entered, the Retention Margin % will calculate and update.

Select either the Max Retention Value OR the Retention Margin %, not both.

 
Project Retention Margin % Percent margin of the Retention. If a value is entered, the Max Retention Value will calculate and update.
Inv. Retention Margin % Allows invoice retention amounts to be greater than the whole Retention Margin %. Retention amount on invoices will use this figure to calculate the value that will be withheld.
Retention Period The number of months that the retention will be withheld. Used to calculate when retentions can be claimed.

Once the first project invoice has been marked as Approved, these values will be locked and you won't be able to make any alterations, with the exception of Inv. Retention Margin %.

 

 

Completion and retention period claims

Once our retention information has been saved against the Project, we can set the retention percentage we can claim on project completion and/or after the retention period has lapsed.

If you can claim a percentage amount of your retentions when the project is completed, set the Completion Claim % value. This will modify the Liability Period % to the remaining percent so you don't claim for more or less that you are entitled to. The Claim Date shown is the Project Completion Date.

If you can only claim your retentions once the Retention Period has lapsed, there is nothing further to do since the default value for the Liability Period % is 100, meaning that we will be claiming the full amount of our retentions on the Claim Date shown (Retention Period + Project Completion Date).

 

Retention Alerts

If you'd like to be alerted when you're getting close to making a retention claim:

  1. Click the Retentions tab
  2. In your Retention Alert Settings, tick Dashboard Retention Expiry Alert
  3. Enter the number of days prior to a claim needing to be made in the Days Before Claim Date box.

AroFlo will now show an alert in your Message Board, as shown above, with a direct link to your project to help you manage the retention claim process.

Click the Claimed checkbox in the Retentions area to dismiss the alerts.

 

 

Retentions on invoices

Any invoice that you raise in AroFlo against that project, whether it is a Task/Project or Progress invoice, will show the retention amount for that invoice underneath the Balance Due for the invoice.

Once the invoice has been created, the retention amount will be added to the Provisional Retention Total area of the Retentions tab. When an invoice is Approved, the amount is transferred to an entry in the Retention Witholdings area to make it easier to track each amount.

Displaying Retention Amounts on an Invoice

  • You can use the invoice layout fields [Total (ex) less Retention] or [Total (inc) less Retention] to provide your client with an invoice that shows the balance with the retention withheld.
  • To display your preset margin percentages on an invoice use the Static Data fields: Project Retention Margin % or Inv. Retention Margin %.