A project has a contract value of $850,000 with 10% retainage. If the contractor has submitted applications totaling $680,000 and received payments of $550,000, what is the total amount currently being retained?
Correct Answer
B) $68,000
Retainage is calculated on approved applications, not payments made. With $680,000 in submitted applications and 10% retainage, the retained amount is $680,000 × 0.10 = $68,000.
Why This Is the Correct Answer
Retainage is calculated based on the value of work applications submitted and approved, not on the actual payments received. The contractor has submitted applications totaling $680,000, and with a 10% retainage rate, the owner retains $68,000 from these applications. The difference between applications submitted ($680,000) and payments received ($550,000) confirms this calculation, as $680,000 - $68,000 = $612,000 should be paid, but only $550,000 has been received so far.
Why the Other Options Are Wrong
Option A: $55,000
$55,000 would be 10% of the payments received ($550,000), but retainage is calculated on applications submitted, not payments made
Option C: $85,000
$85,000 would be 10% of the total contract value ($850,000), but retainage is only calculated on work actually performed and submitted for payment
Option D: $130,000
$130,000 represents the difference between applications submitted and payments received ($680,000 - $550,000), but this includes both retainage and any unpaid approved amounts
Memory Technique
Remember 'ART': Applications × Rate = Total retainage. Retainage is always calculated on Applications submitted, not on payments Received or Total contract value.
Reference Hint
Florida Building Code - Administrative Chapter 1, Section on Construction Contracts and Payment Procedures
More Contract Admin Questions
A project experiences a 30-day delay due to unusually severe weather. The contract includes a liquidated damages clause of $1,000 per day for delays. If the weather delay is excusable but not compensable, what liquidated damages apply?
A commercial project requires a total of 12 inspections. The building department charges $85 per inspection for the first 5 inspections, $65 for inspections 6-10, and $45 for any additional inspections. What is the total inspection fee?
What document must be posted at the job site before a Certificate of Occupancy can be issued for a commercial building?
A mixed-use development requires a variance for reduced setbacks. The property is located within 500 feet of a hospital. What additional consideration must be addressed?
A LEED project requires tracking of regional materials. Materials are considered regional if they are extracted, harvested, or recovered, as well as manufactured within what distance of the project site?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Project Management
60 questions · 70% to pass
Previous Question
A building permit application requires structural drawings to be sealed by a licensed professional. Who can provide this seal for a commercial building project?
Next Question
A contractor receives a Notice to Owner from a subcontractor. Under Florida lien law, what action should the contractor take to protect themselves?