What term refers to the percentage withheld from completed work as a guarantee against defects?

The term that refers to the percentage withheld from completed work as a guarantee against defects is retainage or retention. In construction and engineering projects, retainage serves as a financial incentive for contractors to complete the project in accordance with the agreed-upon standards and to address any potential defects that may arise after the work is completed.

This practice is common in the industry, as it protects the owner or developer by ensuring the contractor has a vested interest in the quality of their work even after receiving partial payments. Retainage is typically a specified percentage of the total contract value, held until all project obligations are satisfied, including the resolution of any defects or issues that may be identified during a specified warranty period.

While escrow, deposit, and holdback are terms that may relate to financial security in various contexts, they do not specifically capture the mechanism of withholding a percentage of payment directly tied to the project's quality assurance. Escrow typically involves a third party holding funds until certain conditions are met, while deposit refers to a prepayment often made to secure services or goods. A holdback usually refers to the amount retained until contract obligations are fully met but may not always explicitly indicate its relation to defects. Thus, retainage is the most accurate and widely used term in