Abolish retention?

Tony Bingham’s latest column in Building (“Who says it’s not fair?”, 30 May 2014, page 39) was, again, on the contentious issue of retention. He suggests that in 11 years, retention will have been outlawed by government. Unusually, his views on retention are not obvious: perhaps he’s avoiding the wrath of fellow contributor, Rudi Klein, whose opinions are always crystal clear?

Retentions are necessary now, and will continue to be. From the client’s viewpoint, he faces the prospect of a diverse and sometimes confrontational, inefficient industry. Among the risks will be the unusual feature of having to pay for most of the cost long before he can enjoy the finished building.

Experience has proven the retention fund a powerful incentive to the builder to provide what was specified, on time. Clients would lose a valuable tactical weapon if retention was abolished. None of the defenders of the abolition have yet come up with an alternative.

A possible solution (which some may consider a poor substitute) may lie in clause 1 of the Supply Chain Payment Charter that Bingham quotes: “We (the client) will make correct full payment for all work properly carried out or products supplied.”

This principle is already implicit in most standard forms of contract, but can be applied too casually: a carelessly fully certified load of defective bricks can usually be corrected at the next valuation, without too much risk to the client. If I were still advising clients and contract administrators in the knowledge that there was no retention fund, I would emphasise the crucial importance of more meticulous valuations for certificates, which might result in a pyrrhic victory for the opponents of retention.

Malcolm Taylor FRICS, Lancaster