Retention Policy Statement/Construction projects

The Scottish Government published guidance on the use of cash retention in construction contracts in CPN 3/2022, which became effective on 20 February 2023. It required retentions, where they are considered necessary, to be applied carefully and fairly as the commercial element of a project delivery strategy seeking to eliminate potentially defective work.

CPN 1/2024 (released in June 2024) implements a further two recommendations, agreed by Scottish Ministers. They are incorporated into the Retention in Construction Contracts chapter of The Client Guide to Construction Projects with the following aims:

• to raise awareness of retention use in the public sector
• to promote transparency among public bodies
• to facilitate knowledge, understanding and decision-making among contractors

Where retention is deemed relevant, practices should be implemented regardless of the estimated capital works cost. Monetary value is not always a reliable measure of risk and complexity. Smaller projects should not be exempt from benefitting from a considered approach to retention. Those closest to a project are best placed to make an assessment which is scaled and proportionate to its particular characteristics.

SCRA’s policy

SCRA’s policy for retention has been developed and derived from Chapter 17 in Handbook 1 of the Client Guide to Construction Projects.  We additionally take advice from professional Consultants who we have engaged to assist us, and will consider alongside their advice what, if any, retention should be applied.

SCRA’s overall strategic approach is to reduce or remove the need for retentions and for our contractors to deliver zero defects through our effective planning, procuring and contract management of projects. Application of retention is not currently applied to all construction projects and each project is reviewed on a case-by-case basis including evaluated risks using advice from Consultants, is proportionate, fair, and from undertaking our own financial due diligence.

Scottish Government’s National Public bodies directory can be found on the Scottish Government website.