What percentage of retainage is typically held on payment applications for public works projects in Florida?
Correct Answer
A) 5%
Florida Statute 218.735 limits retainage on public works projects to 5% of the amount of each progress payment. This is lower than many private projects which may retain 10%.
Why This Is the Correct Answer
Florida Statute 218.735 specifically limits retainage on public works projects to a maximum of 5% of each progress payment amount. This statute was enacted to improve cash flow for contractors working on government projects and to reduce the financial burden that higher retainage percentages can place on contractors. The 5% limit applies to state, county, municipal, and other public entity construction projects in Florida.
Why the Other Options Are Wrong
Option B: 20%
15% retainage would be excessive and is prohibited by Florida Statute 218.735 for public works projects. This high percentage would create significant cash flow problems for contractors and is not permitted under Florida law for government projects.
Option C: 10%
10% retainage is commonly used on private construction projects but exceeds the statutory limit for Florida public works projects. While this percentage may seem reasonable, Florida law specifically caps public works retainage at 5% to protect contractors' cash flow.
Option D: 15%
20% retainage is extremely high and violates Florida Statute 218.735 for public works projects. Such a high retainage percentage would severely impact contractor cash flow and is four times the legal maximum allowed on Florida public works projects.
Memory Technique
Use the mnemonic 'Public Five' - Public works projects are limited to 5% retainage in Florida, which rhymes and creates an easy association.
Reference Hint
Florida Statutes Chapter 218.735 - Local Government Prompt Payment Act, or Florida Construction Law reference materials covering public works payment requirements
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