Clients abandon retentions

08 November, 2006

Over 12% of construction work by value is no longer subject to the practice of retention, according to the latest assessment by the Specialist Engineering Contractors (SEC) Group. The latest additions to the group’s list of clients that no longer include retention clauses in their construction contracts includes the following. • ALDI (food stores). • Arena (housing association). • Circle 33 (housing association). • DeVere Hotels (on framework agreements for capital projects). • The Environment Agency. • The Highways Agency. • IKEA. • Luminar Leisure. • Yorkshire Water. Prof. Rudi Klein, chief executive of SEC Group, says, ‘Last year the National Audit Office expressed its disapproval of the practice of retentions by stating that they had an adverse impact on the industry’s capacity. My estimate is that over 12% of construction, by turnover is now a retention-free zone. ‘However, I remain concerned that there are still too many lead contractors demanding retentions, even where their clients are not requiring them. He added that SEC Group awaited a clear message from the Olympic Delivery Authority that retentions will not be used on any Olympic projects. ‘If trust and collaboration are to underpin Olympic delivery, retentions — which are the antithesis of trust — are wholly inappropriate,’ he insisted.

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