APPRAISAL OF THE ADMINISTRATION OF RETENTION IN BUILDING CONSTRUCTION CONTRACTS IN LAGOS STATE, NIGERIA

Abstract

The administration of retention as a performance security mechanism in building contracts is fraught with inadequacies, leading to its criticisms by project participants especially contractors, in the construction industry worldwide. Retentions are often not applied strictly in accordance with the rules guiding their application as clients unduly withhold contractors’ retentions beyond the time contractually allowed to hold retentions. This research therefore aims to appraise retention administration in building contracts in Lagos State, Nigeria with the main focus on reviewing the provisions in standard building contracts for retention administration, evaluating the challenges associated with retention administration and examining strategies for improving its administration. The study employed a cross-sectional survey design using a quantitative approach while census and judgement sampling where used in selecting samples. Research data of well-structured questionnaires from 146 respondents were analysed using percentile, mean score and Kruskal-Wallis test, while content analysis was used in reviewing the standard forms of construction contracts. The research reveals that the challenge with the most impact on retention administration is that retentions are sometimes not paid at all thereby eroding contractor’s profits while the use of a combination of retention and performance on a single contract is the most popular and important strategies for improving retention administration. The study concludes that most standard building contracts use retention ranging from 3% to 10% in their contracts; the challenge with the most impact on retention administration is that retentions are sometimes not paid at all thereby eroding contractor’s retention and a combination of retention and performance bond on the same contract is the most important strategies. The study recommends that legislation be put in place that mandates employers to release retentions as and when due and direct payment agreement approach where a third party is in custody of and payment of retentions.