Free Construction Calculators & Tools/Retention Calculator

Retention Calculator

Calculate retention amounts, release schedules, NPV of tied-up capital, and cash flow impact.

Contract Details

Currency

Contract Value ($)

$10.00M

Retention Percentage: 10%

Release at Practical Completion: 50%

50% released at completion, 50% at end of DLP

Defects Liability Period (DLP)

Interest Rate (for NPV calculation)

Total Retention

$1.00M

Annual Cost of Capital

$25K

NPV of Retention

$976K

Retention Summary

Total retention amount$1.00M

Released at completion$500K

Released at end of DLP$500K

Release Schedule

Milestone	Month	Amount Released	Balance
Practical Completion	Completion	+$500K	$500K
End of DLP	Month 12	+$500K	$0

Cash Flow Impact

NPV of retention (money locked)$976K

Annual cost @ 5% interest$25K

Capital tied during DLP$500K

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Share your inputs and results with our team, along with your contact details, if you'd like to discuss them or see how Arkan handles this work.

FINANCIAL DISCLAIMER

This calculator provides INDICATIVE FIGURES for reference purposes only.

Important:

1. Results are based on standard formulas and user-provided inputs. Actual contractual amounts may differ based on specific contract terms and conditions.

About This Calculator

This retention calculator helps contractors understand the financial impact of retention withholdings on construction projects. Calculate cumulative retention amounts, forecast release schedules based on contract milestones, and determine the net present value of tied-up capital. Essential for cash flow planning and evaluating retention bond alternatives in UAE and Gulf construction contracts.

When to Use This Calculator

Planning project cash flow with retention deductions
Comparing retention vs retention bond options
Forecasting retention release at key milestones
Calculating NPV impact of delayed retention release
Negotiating retention terms in contract negotiations

How to Use This Calculator

Enter contract parameters

Input contract value, duration, and billing frequency

Define retention terms

Specify retention percentage, threshold, and maximum cap

Set release milestones

Enter Substantial Completion and DLP end dates

Input financing cost

Enter interest rate for NPV calculation of tied capital

Review retention analysis

View cumulative retention, release schedule, and NPV impact

Typical Scenarios in UAE & Gulf Projects

Large Dubai Commercial Project

200M AED contract with 10% retention capped at 5% (10M max). Calculator shows retention builds to 10M by month 6, held for 24-month construction plus 12-month DLP. NPV cost of tied capital at 8% rate = 2.1M AED. Retention bond at 1.5% annual = 450K saves 1.65M.

Abu Dhabi Fit-out Contract

15M AED interior fit-out with 5% flat retention. Calculator forecasts 750K retention held, 50% (375K) released at Practical Completion, remainder after 6-month DLP. Short duration makes retention bond less economical than cash retention.

Frequently Asked Questions

Defects Liability Period (DLP) in Gulf construction typically ranges from 12-24 months. The FIDIC default Defects Notification Period is 365 days unless the contract states otherwise; many UAE projects specify longer periods. During DLP, the contractor must rectify any defects that appear, and the remaining retention is held as security.

Retention bonds are economical for larger, longer projects where NPV of tied capital exceeds bond cost. Calculate: if contract >50M AED with >24-month retention period, bonds typically save money. Bond rates in UAE range 1-2% per annum. Consider your company's borrowing cost when comparing.

Only if the contract provides for it. FIDIC includes an optional retention money guarantee (a form annexed to the 1999 and 2017 Red Books) that can replace cash retention if the Particular Conditions allow it; otherwise release follows Sub-Clause 14.9 (half at taking-over, half after the Defects Notification Period). Where allowed, the guarantee amount equals the retention released early and stays valid until the normal release date.

Take Your Calculations Further

This calculator reflects the logic built into Arkan's construction management platform.

Last Updated: January 2026

Standards Reference: FIDIC Contract Conditions, UAE Commercial Transactions Law

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