A project has a contract value of $850,000. The owner retains 10% on each payment application. If the contractor has submitted applications totaling $680,000, what is the total amount of retainage being held?
Correct Answer
D) $68,000
Retainage is calculated as 10% of the payment applications submitted ($680,000 × 0.10 = $68,000). The total contract value is not relevant to calculating current retainage held.
Why This Is the Correct Answer
Retainage is calculated based on the actual payment applications submitted to date, not the total contract value. Since the contractor has submitted applications totaling $680,000 and the owner retains 10% on each payment application, the retainage held is $680,000 × 0.10 = $68,000. The total contract value of $850,000 is irrelevant for calculating current retainage because it represents future work not yet applied for payment.
Why the Other Options Are Wrong
Option B: $17,000
This appears to be calculating the difference between total contract retainage potential and current retainage ($85,000 - $68,000 = $17,000), which represents future retainage on unsubmitted work, not current retainage held.
Option C: $76,500
This incorrectly calculates retainage based on the total contract value ($850,000 × 0.10 = $85,000) rather than the actual payment applications submitted. Retainage is only held on work that has been completed and applied for payment.
Memory Technique
Remember 'SOAP' - Submitted Only Affects Payment retainage. Only calculate retainage on what's been submitted for payment, not the total contract.
Reference Hint
Florida Building Construction Standards - Chapter on Payment Procedures and Retainage Requirements
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?
An indemnification clause in a construction contract typically requires the contractor to:
A property owner wants to convert a single-family home into a duplex in an area zoned for single-family residential use. The conversion meets all building codes but violates density requirements. What approval is needed?
As-built drawings are typically required to be submitted:
AIA Document A401 is primarily used for:
A general contractor is building a 12,000 square foot commercial warehouse. The building permit fee is calculated at $8.50 per $1,000 of construction value. If the project value is $2,400,000, what is the building permit fee?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
A contractor needs to estimate the cost of a backup generator for a 30-day rental period. The generator costs $150,000 new, has a 10-year useful life, and the rental rate is $400 per day. What is the ownership cost per day assuming straight-line depreciation?
Next Question
Your client requests a construction estimate for budget approval but design is only 30% complete. The architect indicates the building will be approximately 25,000 square feet. Which estimating approach provides the most appropriate level of accuracy?