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Retainage Calculator

Retainage is money you have earned and cannot collect yet. It is withheld from every application until the owner releases it, which means you are financing a portion of your own work — often for months after that work is finished. This calculates what is being held, what has come back, and the gap you are funding in the meantime.

Anything the owner has already paid back.

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Retainage held to date

$31,500.00

Total contract
$525,000.00
Gross earned
$315,000.00
Retainage this period
$12,500.00
Retainage released
$0.00
Still being held
$31,500.00
Net payment this period
$112,500.00
Cash gap
$31,500.00

How the calculation works

Total contract
Contract amount + Change orders
Gross earned
Total contract × Work completed %
Retainage held
Gross earned × Retainage %
Cumulative, across every application to date.
Retainage this period
Current billing × Retainage %
Still being held
Retainage held − Retainage released
Net payment
Current billing − Retainage this period
Cash gap
Still being held
Earned, not collectable, and still funding payroll.

Worked example

Contract amount
$500,000.00
Change orders
$25,000.00
Total contract
$525,000.00
Work completed
60%
Gross earned
$315,000.00
Retainage held at 10%
$31,500.00
Current billing
$125,000.00
Retainage this period
$12,500.00
Net payment this period
$112,500.00
Cash gap
$31,500.00

The $31,500 cash gap is real money already earned on work in place. It stays outstanding until the owner releases retainage, which on many contracts does not begin until substantial completion.

How to use it

  1. 01Enter the contract amount and any approved change orders — retainage is withheld against the revised total, not the original.
  2. 02Set work completed as a percentage of that total to get gross earned to date.
  3. 03Enter your contract's retainage rate. Ten percent is common but by no means universal, and some contracts step it down after 50% completion.
  4. 04Enter current billing for this period to see what gets withheld now and what you actually collect.
  5. 05Enter any retainage the owner has already released so the remaining balance and cash gap reflect reality.

Common mistakes

Confusing retainage held with retainage this period

Held is cumulative across the whole job; this period is only what comes off the current application. Reporting one as the other either overstates what you can expect back now or understates what is outstanding.

Assuming the rate never changes

Many contracts reduce retainage once the job passes a completion threshold, and some release the accumulated balance down to the new rate at that point. Check the clause before forecasting cash.

Ignoring retainage in cash flow planning

At 10%, a contractor running several jobs can have a substantial sum permanently outstanding. It is earned revenue that cannot pay a supplier, and treating it as available cash is a common route into a squeeze.

Forgetting subcontractor retainage flows separately

What you withhold from subcontractors and what the owner withholds from you are two different balances on two different release schedules. Netting them mentally hides the real exposure.

Questions

What is retainage in construction?

A percentage of each payment the owner withholds until the work is complete and accepted. It exists to give the owner leverage to get punch list items finished, and it is released after substantial or final completion depending on the contract.

How is retainage calculated?

Multiply the amount earned to date by the retainage rate in your contract. On an individual application, multiply that period's billing by the same rate to see what is withheld now.

What is a typical retainage rate?

Rates vary by contract, owner and jurisdiction, and some public projects are subject to statutory limits. Rather than assume a standard figure, read the retainage clause in your contract and enter that rate.

What is the retainage cash gap?

The money you have earned, cannot invoice for yet, and still have to fund payroll and materials against. It is the practical reason retainage matters more to a contractor's cash position than its size on paper suggests.

When does retainage get released?

That depends entirely on the contract. Common triggers are substantial completion, final completion, or a stepped reduction once the job passes a completion threshold. Check the specific clause rather than relying on custom.

Related tools

Progress Payment Calculator

Work out the full application this retainage is withheld from.