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JCT Interim Payments and Retention
How do I raise a monthly interim application on a JCT contract and work out the retention the client keeps?
Create the contract as a Client contract, name the real JCT form in the title, set retention to 3% and the start to the Date of Possession. Then create a progress claim and populate it from progress: £148,500 gross, £4,455 retention, £144,045 net due before VAT. Half of the retention is released at practical completion and the rest with the Certificate of Making Good. The app has no JCT 2024 template (the 2016 one is a label only), issues no Interim Certificate or Pay Less Notice, and its Payment Clock uses the Scheme's periods, so diarise the JCT dates yourself.
This example follows an interim payment on a JCT-style building contract in OpenConstructionERP. We enter the contract terms, value the work completed and calculate retention before reviewing the amount due.
You will produce
A contract with 3% retention and a first progress claim of £148,500 gross, £4,455 retention and £144,045 net due before VAT, with the five payment dates.
Sources
- JCT Standard Building Contract With Quantities 2024
- JCT Standard Building Contract 2016
Transcript
0:00 The rules
This lesson is about the monthly payment on a JCT main contract. You'll learn the 5 dates in each cycle, and work out the retention the client keeps. Then you'll raise the first application in the app. This month's application is for £148,500. The client keeps 3%, and half of that waits for the Certificate of Making Good. Each part has its own date. Last time, Tandlewick let the dry lining to Lintmoor. Now the job is on site. Each month, Tandlewick's QS applies. The client's QS values the work, and the architect certifies it. The main contract is the JCT Standard Building Contract With Quantities, 2024 edition. Each month has an Interim Valuation Date. The first is Wednesday 30 September. Payment falls due 7 days later: Wednesday 7 October. Within 5 days, the architect issues the Interim Certificate. That counts as the payment notice. The final date for payment is 14 days after the due date: Wednesday 21 October. A Pay Less Notice must be given no later than 5 days before it: Friday 16 October. Now the money. The client's QS values September at £148,500: Valuation 1. The Retention Percentage is 3%, so the client keeps £4,455. That leaves £144,045, before VAT. The full 3% is held until practical completion. After that, only half is held, until the Certificate of Making Good. Cash retention may not last. The government proposes to ban it, and a Bill is before Parliament. Nothing has changed yet.
1:58 Start the contract
Now to the app. In OpenConstructionERP, open Contracts under Commercial, and click New Contract. The counterparty starts as Subcontractor, so switch it to Client. Now the clause template. The app has no JCT 2024 edition. The nearest is JCT Standard Building Contract 2016. It's a label only. It sets no dates and no retention. So name the real form in the title. Type the contract sum from the tender. The currency already follows the project: pounds. Retention starts at 5%, so change it to 3%. Set the start to the Date of Possession, and click Create. A contract must be signed before its first claim. We signed it off camera, so it reads Active. Open it: pounds, and 3% retention. The release event reads Substantial completion, the app's US term. The nearest JCT event is practical completion. Below, each line of the schedule of values shows its link to the estimate. That link is where the claim reads progress from.
3:13 Claim and retention
Now Tandlewick's application. The app calls it a progress claim. The site manager recorded this month's progress against the estimate. Open Progress Claims and create one for September. Click Populate from progress, and commit the lines. The claim reads: gross, £148,500. Retention, £4,455. Net due, £144,045. They match Valuation 1, all before VAT. Back in the contract, its retention ledger holds £4,455. The app counts retention only once a claim is approved, so we approved this one off camera. Click Release retainage, the app's US word, and preview Substantial completion. Half comes back: £2,227.50. The app says its rule is the built-in default, not a national rule. Preview End of the defects period, and everything still held comes back. On a JCT job, read those as practical completion and the Certificate of Making Good.
4:29 Get it right
The app leaves three things to you. It issues no Interim Certificate or Pay Less Notice, so keep those documents on file. Its Payment Clock counts the Scheme's periods, not JCT's, so diarise this contract's dates yourself. And it can't know when the Certificate of Making Good is issued. Apply for the last half in your next application after it, and check it appears on the certificate. Here are three mistakes we see. One: no application by the Interim Valuation Date. If no certificate comes, nothing stands as the payment notice. Then the final date for £144,045 slips. Two: expecting the last half of retention at the end of the Rectification Period. It comes with the Certificate of Making Good. Three: never asking the client to put retention in a separate bank account. Ask, in writing. Pro tip. Each month, lay the Interim Certificate beside your application, line by line. Query every gap with the client's QS that week, while the site records are fresh. Pause the video. Valuation 2's Interim Valuation Date is Friday 30 October. No bank holidays. What's the last day for a Pay Less Notice? The answer: Sunday 15 November. Due Friday 6 November, final date Friday 20 November, 5 days back. Weekends count. Here's your checklist. It's also in the description, to download. OpenConstructionERP is free and open source, and it runs on your own server. No subscription, no per-seat licence. Next time: the money flows down. Two subcontractors apply to Tandlewick's QS, and one notice gets missed.
