UK ban on retention payments: NEC/JCT contract impacts for project teams
Reviewed by Joe Ashwell

First reported on New Civil Engineer
30 Second Briefing
Government plans to ban cash retentions in construction contracts aim to “prevent the abuse of retention payments in construction”, signalling a major shift in how risk and defects liability are managed across UK projects. The move would directly affect standard forms such as NEC and JCT, where 3–5% retentions are commonly withheld through practical completion and defects periods. Contractors and subcontractors could see significant changes to cashflow, security instruments (bonds, project bank accounts) and commercial negotiation of quality and defect-remedy provisions.
Technical Brief
- Measure is framed explicitly as preventing “abuse of retention payments in construction”, indicating conduct-based regulation.
- Government intervention targets contractual payment mechanisms rather than technical standards or building regulations.
- Employers and main contractors likely to lean more heavily on performance bonds, PCGs and collateral warranties.
- Defects liability management may shift towards more prescriptive inspection, testing and certification regimes at handover.
- For long-duration tunnelling and ground engineering works, pricing of latent defect risk is likely to move into tendered rates.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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