Replacing Retentions Research Ends as Contractors Unwilling to Report Errors

RESEARCH into measuring the quality of a construction project that aims to eliminate retentions will not progress as contractors are unwilling to report errors.

Work to develop and test a quality metric to replace retentions on payments of construction contracts was started by the Construction Leadership Council with Actuate UK and the Get It Right Initiative (GIRI).

Retentions – the practice of withholding portions of the project’s value – has dogged the construction industry for many years. Retentions are often imposed unfairly, without explanation and subcontractors are particularly subject to the practice. It often forces up the value of contract bids in order to compensate for anticipated costs of retentions, by as much as 10%.

Replacing Retentions

The National Federation of Roofing Contractor’s (NFRC) State of the Trade report in 2021 found retentions to be the number one issue challenging roofing contractors.

Over half of roofing contractors reported being owed an average of 5.8% of their total turnover in retentions.

In 2023 NFRC found 86% of their members surveyed reported trouble getting paid retentions for on local authority contracts. Earlier that year, NFRC visited Parliament to discuss the issue with MPs and the Lords.

The CLC pilot project created the new quality metric as a viable alternative to the withholding of cash retentions as a form of insurance against defects. It was funded by GIRI funded at the Centre for Design Engineering (CDE) at Cranfield University.

The pilot study worked on developing and testing a way to record a contractor’s quality performance across previous projects. It used outstanding defect information recorded on completion certificates. The information was piloted for use on deciding on whether to hire contractors and incentivise improved performance.

Contractors Unwilling

Researchers found it a challenge to get contractors to disclose information on the error frequency rate (EFR) of construction projects. They cite the adversarial nature of contracts, adding that the question that is always asked when information is requested is ‘how could this be used against me?’ Researchers point out that this is justified because many projects end in recrimination, claim and counter claim.

While the university recommended a new app should be developed for reporting defects, they conclude that low participation from contractors means the study cannot progress.

The report concludes:

“It is clear that the construction industry will not voluntarily provide project data on defects. The process of briefing and gaining commitment from participants has been challenging. Therefore, this project will conclude at this stage.”

The research report is available from the CLC.

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