NEC ECC: X16 Retention Clause

We are a contractor under NEC3 ECC Option C.

X16 states retention of 5% (no retention free amount).

No retention has been deducted from our monthly payments to date (over circa 18 months).

The PM has now advised that 5% retention will be deducted from our next payment certificate (next month)…This could well result in a net ‘nil’ payment in month, severely affecting business cash flow.

I note that X16 states ‘an amount is retained in each amount due’, which has not happened.

Grateful for any advice on our position and what our response should be.

Sorry but they are entitled to correct any amount in a subsequent assessment. The fact is they were entitled to but hadn’t does not now mean they can do it at this stage.

You could notify an early warning and explain what position this will cause you and it may affect your ability to pay suppliers and finish on time, but you will be relying on their good will. At the end of the day retention is there to encourage you to achieve Completion, and the other half retained until the defect date. Given you may be close to Completion anyway, may be you can get them to agree to just withhold the 2.5% at this stage which will be held until Defect Date.