What is the standard retainage percentage allowed on public construction projects in Florida?
Correct Answer
A) 5%
Florida Statute 218.735 limits retainage on public construction contracts to 5% of the amount of each progress payment. This is lower than the traditional 10% retainage often used on private projects.
Why This Is the Correct Answer
Florida Statute 218.735 specifically establishes that retainage on public construction contracts cannot exceed 5% of each progress payment amount. This statute was enacted to improve cash flow for contractors and subcontractors working on public projects. The 5% limit applies to all public construction projects in Florida, including state, county, and municipal contracts. This is a mandatory ceiling that public entities cannot exceed, making it a critical regulation for contractors to understand.
Why the Other Options Are Wrong
Option B: 7.5%
7.5% exceeds the statutory limit established by Florida Statute 218.735. While this percentage might seem reasonable, it violates the specific 5% maximum retainage requirement for public construction projects in Florida.
Option C: 10%
10% represents the traditional retainage percentage commonly used on private construction projects, but Florida law specifically limits public project retainage to 5%. Using 10% retainage on a public project would violate Florida Statute 218.735.
Option D: 15%
15% is significantly higher than the statutory maximum and would be illegal on Florida public construction projects. This percentage far exceeds the 5% limit and would create severe cash flow problems for contractors while violating state law.
Memory Technique
Think 'Public = 5' - public projects get the lower retainage percentage to help contractor cash flow with taxpayer-funded work.
Reference Hint
Florida Statutes Chapter 218, specifically Section 218.735 - Public Construction Retainage
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