Retention on steel is held a year after you top out
You topped out in May and demobilized in June. The building gets its certificate of occupancy next spring, and that's when your last five to ten percent finally moves.
Steel goes up first and gets paid last, and no trade finishing near the end of the job ever waits that long for its money. Your retention stays out through the entire envelope, the interiors, the punch list, and the inspection cycle, on a job where your crew and your crane left a year earlier. Nothing remains on the schedule of values to offset it, so it ages as a receivable with no activity behind it and stops looking like money to anyone in your office.
The size of it
On a $2M package, $100,000 to $200,000 stays out for twelve to sixteen months. That's a mobilization and a payroll cycle you're financing for somebody else's punch list.
Structural steel is substantially complete around 30 to 40 percent into a building's schedule, so on an 18 to 24 month job you're off site by month seven or eight. Retention releases at substantial or final completion, month twenty or later. Every other trade still on site has progress billing to fund that receivable; you've got a closed job with nothing left to invoice, and the mill was paid net 30 more than a year before the money comes back. That balance is your profit on the job, and it funds the general contractor's closeout while you mobilize the next one out of pocket.
Three moves, in order
Step 07: Monthly cadence
Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.
What else costs structural steel contractors money
The same mechanism in other trades
What structural steel owners ask
When do I get retainage released on structural steel?
You topped out in May and demobilized in June. The building gets its certificate of occupancy next spring, and that's when your last five to ten percent finally moves.
What does it cost?
On a $2M package, $100,000 to $200,000 stays out for twelve to sixteen months. That's a mobilization and a payroll cycle you're financing for somebody else's punch list.
What do I do first?
Negotiate early release of retention at topping out or at your own final completion, with the trigger written against your scope rather than the building's.
What are structural steel contractors supposed to be making?
Structural steel runs 23% gross margin, 15% overhead and 8% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is 1 point above it. The CFOS target is 11.5%.
Which part of the system fixes it?
The step is number 07, monthly cadence. Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month. It comes from chapter 7 of CONTROL: The Construction Financial Operating System.
Everything on this page is something you can install yourself, andCONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for structural steel contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.
Wrote CONTROL, the 8 step system behind these figures. More about the author.