Utah General Contractors - Business and Law Practice Exam

Under what condition might an owner adjust retainage during a project?

1. Upon the contractor's request

2. After discussing with subcontractors

3. Based on project progress and milestones

4. At their discretion only

The correct answer is: Based on project progress and milestones

The option indicating that an owner might adjust retainage during a project based on project progress and milestones is correct. Retainage is typically a percentage of the payment withheld until the completion of a project to ensure that the contractor fulfills their obligations. When an owner evaluates the progress of the project and assesses whether certain milestones have been met, they may find it appropriate to adjust the amount of retainage. For instance, if the contractor has substantially completed a significant phase of the work satisfactorily, the owner might release a portion of the retainage, reflecting the progress made and the reduced risk of non-completion. This practice not only incentivizes the contractor to continue performing effectively but also fosters a constructive working relationship by recognizing the contractor's achievements throughout various stages of the project. Other options, such as the owner adjusting retainage solely at their discretion, might misinterpret the necessary project oversight and risk management expectations contained within contract agreements. No adjustments should occur unwarrantedly or without valid justification related to project performance.