He says he has seen subs hold back payment unfairly from their own suppliers. Then if a lien is filed, I'm stuck paying twice. It's happened a few times. It's part of what we do, and it's accepted and included and important to us. Other general contractors say the subs know the payment risks and the costs of money and factor that into their bids.
Some general contractors understand that retainage is a double-edged sword.
But retainage can hurt if owners use it to keep a general contractor's project manager on a job when another project has already started, he says. Less time worrying about payment means more time managing a project. Russell Construction itself sometimes has to skirmish with owners who lag on payments, even shutting down a job, although this is rare. The contractor also tries to hold the line against owners who want aggressive payment terms in their favor. Prime contractors say they are sensitive to subs' complaints, but primes can also be shortchanged or put at risk.