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When should X16 (80% Retention Free Amount) Start to be taken if CE's Have Been Instructed?

+1 vote
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X16 Applies with 80% Retention Free Amount. If a (Contract) Target Cost = £30M - Retention should start to be taken at £24M. However, due to CE's the Target Cost is revised to £35.5M - do you concur that Retention should start to be taken from £28.4M to take account of the CE's or should Retention be taken from £24M?
asked Feb 27, 2014 in NEC3 and NEC4 Contracts by Sandra Higgins (160 points)  

2 Answers

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Unless the Employer has written specifically retention free amount is up to 80% of the target cost "at the Contract Date" then I believe that contractually it should be taken as 80% of the revised Target Cost.

At the end of the day the Employer should be looking at what the mechanism that it is trying to achieve. They want a pot of money to ensure that towards the end they have some security that you will correct defects or they have money to get someone else to do them.  It should not be  a means to limit your cashflow towards the end of the project when it is the very time you need the cashflow to meet their key objective which is for you to finish on time.
answered Feb 27, 2014 by Glenn Hide (71,270 points)  
selected Mar 1, 2018 by Glenn Hide
0 votes
It seems to much of a co-incidence that this question arises within a few minutes of another similar one : see my answer to :
http://reachback.builtintelligence.com/6773/ecc-option-c-retention-arrangements

However, if I view your question in isolation, the answer is it depends how the  Employer has expressed 'the retention free amount' inserted in Contract Data part 1.
answered Feb 27, 2014 by Jon Broome (52,480 points)