In December 2002, Hilton Building Services completed the m&e services associated with a new stadium and arena for a council in the east of England.

The main contractor was an established firm with a head office in the same region.

Following the 12 months defects inspection it was noted by the client that although the main contractor had received a Substantial Completion Certificate in December 2002, as of April 2005 he had not completed his contractual works and therefore the client could not issue a Making Good Defects Certificate.

As an act of good faith the council agreed to release £200 000 of the main contractor’s £270 000 retention, with the remainder being released on the issue of the Making Good Defects Certificate which would follow the completion of the works.

Because there has been no Making Good Defects Certificate issued the main contractor is not obliged to make payments of retentions to its subcontractors.

As one of the largest subcontractors on the project our retention account is in excess of £90 000.

The main contractor has profited due to the arcane retention rules. It has had no financial loss, as the monies released in good faith have covered all its outstanding retentions. The monies being held are those of subcontractors like ourselves who have completed our works but, due to the rules, are prevented from progressing our claim for release of retentions due to there being no Making Good Defects Certificate in place.

As of 4 August 2005 the main contractor has not completed the outstanding works and it is believed that it has made no move to even commence them.

If this is not sufficient reason for the abolition of retentions on contracts then I would welcome sight of a better one.

John Ewen, Electrical engineer, Hilton Building Services

Source

Electrical and Mechanical Contractor