Example: Applying Sliding Scale Retention in Procore
Although the terms of the commitments on your construction project's will vary, here's an example to show how sliding scale retention typically works:
- Let's assume you are a general contractor who has executed a $400,000.00 subcontract with a heavy equipment operator.
- During the course of the project, you plan to make progress payments to the subcontractor. As such, you want to deduct 10% of the amount due on each invoice until 5% of the original commitment value ($20, 000.00) is held back.
- When 100% of the work on the subcontract's Schedule of Values (SOV) is complete, you are obligated to release the first portion of the amount held back. In this example, you want to hold back 2.5% of the $20,000.00 (or $10,000.00).
- In six (6) or twelve (12) months after the first portion of the retention amount was released, your subcontract's terms requires you to release the remaining $10,000.00 that was withheld from the subcontractor.