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Contracting authorities considering using retention in construction projects must follow the provisions noted in the guidance for public contracts commencing procurement procedures from 20 February 2023. These are summarised below:
assess the likelihood and impact of defective work occurring
ascertain whether or not retention is needed at all
avoid defaulting automatically to standard retention percentages
analyse evidence, use experience and assess risk to implement retention
apply retention as the minimum required amount
accumulate and hold retention for the shortest appropriate duration
administer one assurance process per project where possible
aim for and prioritise the objective of zero defects
acknowledge the possibility of defective work occurring
agree a remediation estimate to supplant the accumulated retention
automatically release retention when the contractual trigger is achieved
activate clauses which apply these principles fairly in the supply chain
These provisions are intended to help Scottish Government to move towards achieving its long-term aspiration to reduce or remove the need for retentions. Where retentions are used they should be applied judiciously and fairly as the commercial element of a project delivery strategy which seeks to eliminate defective work.
This note and the associated guidance applies to bodies in scope of theScottish Public Finance Manual (SPFM). In particular the staff involved in planning, procuring and delivering related public works projects.
Dissemination and contact
Please convey this CPN to staff involved in the planning, procurement and delivery of construction projects in scope of the Scottish Public Finance Manual. If you have any questions about this CPN please contact:
Scottish procurement: construction policy note CPN 3/2022