A contractor is ready to receive a progress payment of $15,000. Assuming a retainage of 10%, how much does the contractor receive?

A contractor is ready to receive a progress payment of $15,000. Assuming a retainage of 10%, how much does the contractor receive?

• A. $15,000
• B. $1,500
• C. $13,500
• D. $16,500

Answer: (C)

To determine the amount the contractor receives after a 10% retainage is applied to the progress payment of $15,000, it's necessary to calculate the retainage amount first. Retainage is a percentage of the payment that is withheld until the project is completed to ensure that the contractor fulfills all aspects of their contract satisfactorily. In this case, 10% of $15,000 amounts to $1,500. Next, subtract this retainage amount from the total progress payment: $15,000 (total payment) - $1,500 (retainage) = $13,500. Thus, the contractor will receive $13,500 after the retainage is applied. This demonstrates the practice of withholding a portion of the payment to protect project owners from non-completion or substandard work, emphasizing the importance of understanding retainage in contractual agreements.

To determine the amount the contractor receives after a 10% retainage is applied to the progress payment of $15,000, it's necessary to calculate the retainage amount first.

Retainage is a percentage of the payment that is withheld until the project is completed to ensure that the contractor fulfills all aspects of their contract satisfactorily. In this case, 10% of $15,000 amounts to $1,500.

Next, subtract this retainage amount from the total progress payment:

$15,000 (total payment) - $1,500 (retainage) = $13,500.

Thus, the contractor will receive $13,500 after the retainage is applied. This demonstrates the practice of withholding a portion of the payment to protect project owners from non-completion or substandard work, emphasizing the importance of understanding retainage in contractual agreements.