State DOT Retainage Practices Survey

Report
State DOT Retainage Practices Survey
AASHTO Subcommittee on Construction
Contract Administration Section
August 2011
Prepared by:
Tom Goldstein, FWHA
Norm Marzano, RI DOT
Jerry Yakowenko, FHWA
Purpose of Retainage Survey
Determine the best practices other than through holding
retainage, to motivate the Contractors:
 To perform corrective and cleanup work and
 Submit their closeout documentation in a timely manner.
What is retainage?
A portion of money earned by a contractor that is withheld
by financiers, owners, contractors and subcontractors until
assurance is provided that the contractor’s work has been
completed in accordance to the plans and specifications.
Owner Concerns with Retainage
 Prompt payment at all levels for satisfactorily
completed work
 Concerns with cash flow at all levels
 Smaller subs may be impacted more
 Many of these subcontractors are
Disadvantaged Business Enterprises
 Contingencies may be included
49 Code of Federal Regulations 26.29
 1999 Regulation – required recipients to use a clause
requiring primes to return all retainage within a
specified number of days after satisfactory completion
of the subcontractor’s work
 2003 Revised Regulations:
 Requires recipients to use a clause requiring primes to
return all retainage within 30 days of satisfactory
completion, and
 Provides three options regarding recipient withholding
of retainage.
Previous Survey Results
AASHTO Subcommittee on Construction
Survey Year
Total States
Responding
States with
Retainage
States with Zero
Retainage
Prior to DBE Regs
48
40
8
Survey 2001
48
28
20
Survey 2004
50
21
29
Survey 2011
30
9
21
The surveys allowed states to provide more specific responses
and the results can be found at
http://www.fhwa.dot.gov/programadmin/contracts/
Responding States (33)
2011 AASHTO SOC CA Section Retainage Survey
DC
DC
DE
PR
Do any of the following apply regarding
retainage?
 a) Your State does not hold retainage from prime contractors and
prohibits prime contractors from holding retainage from
subcontractors.
(7- NH, MI, CA, TN, AL, NY, TX)
 b. Your State does not hold retainage from prime contractors, but does
allow prime contractors to hold retainage from subcontractors. (14 WY, KS, NC, WA, OK, OH, VA, PA, IN, AR, SD, MN, AK, HI)
 c) Your State holds retainage from prime contractors. (9 - FL, WI, ND,
IA, OR, NJ, CT, MA, ME)
 No response – 3 states
Other than through retainage, does your State have any other means to ensure
Contractors provide necessary paperwork at the end of a contract and/or
Contractors complete punch list items and if so, has it been successful)?
 States specifically mentioning the following means in their response:
 Limitations on payment for mobilization / de-mobilization -TX, AK,
 Use of contract time / liquidated damage provisions -MN, SD, NJ, TN, OH,
KY, WI, FL, OK, WA, KS, NH
 Withholding of specific payments– MA, TN, PA, IA, OH, ID,
 Review contractor responsibility– IN, VA, NC
 Contractor Performance Rating System - FL
 Offset provisions (ability to withhold funds on future contracts) -SD, MI
Other than through retainage, does your State have any other means to ensure
Contractors provide necessary paperwork at the end of a contract and/or
Contractors complete punch list items and if so, has it been successful)?
 Under consideration:
 NYSDOT –


Providing a pay linkage for shop drawing for structural steel
Extending the surety bonding period through the closeout process.
 Iowa


Establishment of a specific schedule of payments to be withheld the
submittal of documents.
A "Finalization" item to be paid upon receipt of all documentation and
resolution of issues at the end of the project.
Other than through retainage, does your State have any other means to ensure
Contractors provide necessary paperwork at the end of a contract and/or
Contractors complete punch list items and if so, has it been successful?
 Notable responses:
 Ohio –Finalization Documents. Failure to submit acceptable documents
results in an administrative fee of $100 per Calendar.
 Georgia - Closing conference held at 95% completion to discuss and
provide a list of deficiencies.
 Michigan – Field has been more diligent in acquiring all paperwork, test
results, etc. prior to paying Contractors. Also, the Department will process
a negative pay estimate and withhold money from another project.

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