📑 Project Management & Bidding · 6 min read
Retention, Mobilization, and Payment Terms in Quotations
A quotation that gets the price right but the payment terms wrong can still sink a contractor. The terms are part of the offer.
Mobilisation / advance payment
- Typically 10–15% of the contract sum, paid on signing against an advance payment bond.
- Recouped pro-rata from each progress payment (e.g. deduct 15% of each claim until repaid).
- Funds early procurement and site setup — the period when a contractor is most cash-negative.
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Retention
| Parameter | Typical |
|---|---|
| Percentage withheld | 10% of each certified amount |
| Cap | often 5% of the contract sum |
| First release | 50% at practical completion / handover |
| Final release | balance after the defects liability period (6–12 months) |
| Substitution | retention bond in lieu of cash withholding |
Billing and payment cycle
Claim submitted → certified within X days → paid within Y days
Common terms: monthly claims, certification within 7–14 days, payment within 30 days of certification. Every day added to this cycle is working capital the contractor must fund.
State it in the quotation
- Validity period of the offer (30–60 days).
- Advance payment %, retention %, and release milestones.
- Billing frequency and payment period.
- Price basis (fixed, or with a fluctuation/escalation clause).
- What triggers suspension for non-payment.
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