Episode 21 - will there be a BAN on retentions?

Could banning cash retentions actually create a bigger problem for subcontractors?

In this episode of The Subbies Toolbox Podcast, Michelle Cirson takes a look at the push to ban cash retentions in construction and what that conversation could mean for Australian subcontractors.

Retentions have been causing problems in the industry for years. They get caught up in payment disputes, left sitting upstream long after the work is finished and can become low-hanging fruit when a relationship with a builder goes sideways.

But removing cash retentions isn't necessarily as simple as it sounds. If builders still require security, subbies could find themselves being asked for bank guarantees, insurance bonds or Director's Guarantees instead.

In this episode, you'll learn:

How retentions become tangled up in payment disputes

What could replace cash retentions if they were banned

How bank guarantees can create a different risk for subcontractors

How Queensland's retention and trust account rules work in practice

How practical completion and defects liability periods affect retention release

Practical ways subbies can negotiate retention arrangements that better reflect the work they're actually doing

Australian Government working groups at both a State and Federal level are looking at ways to make construction businesses more solvent and reliable - and retentions are an obvious band-aid. But looking at banning retentions in isolation to the requirements of upstream parties to provide security to their financiers is short sighted, and could result in subcontractors signing up to more risky types of security, with harsher consequences if recourse is sought.