If the contract amount is $200,000 and progress payments are made in 10% increments with 10% retained, how much is the contractor owed at completion?

To determine how much the contractor is owed at completion, it's essential to understand how progress payments and retention work in construction contracts.

In this scenario, the contract amount is $200,000. The contractor is paid in 10% increments of the contract value, meaning each progress payment is $20,000 (which is 10% of $200,000). With a total of 10% retained on each payment, this means that for every $20,000 payment made, $2,000 is withheld until project completion.

Given that progress payments are made in 10% increments, there will be 10 payments in total (one for each 10% milestone) during the course of the project. Therefore, by the end of the project, the contractor would have collectively earned $200,000, which is the full contract amount.

However, because there is a 10% retention, the total retention amount will be $20,000 (10% of $200,000). At the time of completion, the contractor would typically be owed the full contract amount minus the retention amount. Thus, the contractor is owed the $200,000 minus the $20,000 retained.

At completion, the contractor will receive the retained amount