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Enable Sliding Scale Retention Rules on a Commitment's Invoices

Objective

To enable sliding scale retention rules on an individual commitment's invoices.

Background

Sliding scale retention refers to the portion of a contract amount due that is withheld from a contracted party (the party doing the work) by the contracting party (the party paying for the work).  The amounts withheld are based on a set of variable standards defined in the contract's scope of work. It is an industry-wide best practice in Australia, as well as legally regulated, to assure contractors and subcontractors meet all of the job's contractual obligations. 

Example: Applying Sliding Scale Retention in Procore

Although the terms of the commitments on your construction project's will vary, here's an example to show how sliding scale retention typically works:

  1. Let's assume you are a general contractor who has executed a $400,000.00 subcontract with a heavy equipment operator.
  2. During the course of the project, you plan to make progress payments to the subcontractor. As such, you want to deduct 10% of the amount due on each invoice until 5% of the original commitment value ($20, 000.00) is held back.
  3. When 100% of the work on the subcontract's Schedule of Values (SOV) is complete,  you are obligated to release the first portion of the amount held back. In this example, you want to hold back 2.5% of the $20,000.00 (or $10,000.00).
  4. In six (6) or twelve (12) months after the first portion of the retention amount was released, your subcontract's terms requires you to release the remaining $10,000.00 that was withheld from the subcontractor. 

Things to Consider

  • Required User Permission:
    • 'Admin' on the project's Commitments tool.
  • Additional Information:
    • The settings described in this tutorial are in the Advanced Settings tab and can only be applied on an individual commitment.
    • To learn about other tool-level settings that can be applied globally to all of your project's commitments, see Configure Settings: Commitments and Enable Retainage on a Commitment
  • Limitations:
    • The steps below provide users with a way to automatically reduce retention on invoices. It is important to note that they do NOT automate the release of retention that has accrued over previous billing periods. 

Steps

  1. Navigate to the Commitments tool.
  2. Locate the commitment that you want to add a sliding scale retention rule for. Then click Edit.
  3. Click Advanced Settings.
  4. Under Advanced Settings, click Edit.
  5. Scroll down to Sliding Scale Retention.
  6. Place a checkmark in the Enable Sliding Scale Retention box to enable the feature on the commitment. 
  7. Click Add a Rule.
  8. Do the following:

    add-a-rule-options.png
     
    1. Percentage 1. Enter the retention rate as a percentage. The retention rate refers to the percentage of contract funds that will be withheld from an invoice until the retention rule criterion (defined in the next step) is met. 
      Example
      If you want to retain 10.0% of the contract funds until 5.0% of the original commitment value is held, the retention rate is 10%.
      In this example, you would enter 10.0 in the first percentage box.
    2. Percentage 2. Enter a number in the second box to define the retention rule criterion
      Example
      If you want to retain 10.0% of the contract funds until 5.0% of the original commitment value is held, the retention rule criterion is 5%.
      In this example, you would enter 5.0 in the second percentage box. 
    3. Rule. Select the rule that you want to apply
      Note: You can add up to five (5) rules that automatically calculate sliding scale retention. You can apply one (1) of these calculation methods per rule: 
      • X% until Y% of original commitment value is held
        This rule lets you hold back X percent of of the original commitment amount until Y percent of the original commitment's value is held.  
      • X% until Y% Revised Commitment Value
        This rule lets you hold back X percent of the revised commitment amount until Y percent of the revised commitment's value is held. 
      • $ Amount is Held
        This rule lets you hold back X percent of a contract amount until a dollar amount that you specify is held.  
  9. Click Save.

See Also

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