Retainage on a progress payment is:
Correct Answer
D) A withheld part of earned payment held under the contract until later release
Retainage is part of earned payment held back under contract terms until later release conditions are met. Other choices confuse it with bonds, taxes, or design contingency.
Why This Is the Correct Answer
Retainage is part of earned payment held back under contract terms until later release conditions are met. Other choices confuse it with bonds, taxes, or design contingency.
Why the Other Options Are Wrong
Option A: Classify the condition as a bid bond premium as a bonding paperwork issue that controls retainage
Choice A gives A bid bond premium. Its specific error: the option answers a paperwork, payment, or bonding issue.
Option B: Classify the condition as a sales tax charged on stored materials
Choice B (A sales tax charged on stored materials) is rejected because the choice would not get the project to A withheld part of earned payment held under the contract until later release, which is the Retainage result verified by the source.
Option C: Classify the condition as a design contingency owned by the architect
In procurement and contracting, A design contingency owned by the architect is the wrong selection for Retainage: the option does not produce the required Retainage outcome, A withheld part of earned payment held under the contract until later release.
Memory Technique
Keep retainage as a cause-to-effect card with A withheld part of earned payment held under the contract until later release on the back.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "Retainage" to confirm that Retainage is part of earned payment held back under contract terms until later release conditions are met.
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