What is the term for an amount withheld from progress payments to ensure satisfactory completion of the work?

The term that refers to an amount withheld from progress payments to ensure satisfactory completion of the work is retainage. In construction contracts, retainage serves as a form of security for the project owner, ensuring that the contractor completes the project according to the agreed-upon standards and specifications.

Retainage is typically a percentage of each progress payment withheld until the completion of the project. This practice is intended to motivate the contractor to finish the work diligently and address any deficiencies that may arise during construction. Once the project reaches completion and is accepted by the owner, the retained amounts are released to the contractor.

Understanding retainage is essential for managing cash flow in construction projects and for ensuring that all parties are incentivized to adhere to quality and timeline expectations.