Utah Contractor Practice Exam

What type of payment is withheld to ensure job completion?

1. Partial Payments

2. Retainage

3. Full Payment

4. Progress Payment

The correct answer is: Retainage

Retainage is a specific type of payment withheld from contractors to ensure that a job is completed satisfactorily. It acts as a financial incentive for contractors to finish their work on time and meet the quality requirements outlined in the contract. This practice reduces the risk for the project owner, as it retains a portion of the payment until the project reaches completion and any necessary punch-list items are addressed. In many construction contracts, a certain percentage of the total payment is retained—commonly around 5% to 10%—which will be paid to the contractor upon the fulfillment of all contract conditions. This motivates contractors to maintain a high standard of execution throughout the duration of the project and helps protect the project owner in case of deficiencies in the completed work. Partial payments are typically payments made at intervals during the progress of the project but do not necessarily serve the same purpose of ensuring completion. Full payment refers to the total amount due for the project and does not involve withholding any funds. Progress payments are made for work performed to date but, like partial payments, do not have the same intent as retainage. Therefore, retainage is the most accurate term for the payment withheld to ensure job completion.