retention money

i am just confused lang po about the retention money. is this the warranty stated in sec 62 of the r.a 9184, that when claimed by the contractor, they will post a bank guarantee of 10%, if LC 5% or if surety bond 30% of the contract prize? or the contractor will just replace the retention money with a surety bond equivalent to the retention money upon collection? thanks

The forms of warranty with 5% 10% and 30% is for infrastructures. (Section 62.2.3.3 IRR - pertains to 62.2.3.1 (a) /Structural Defects) - no retention here

The forms of warranty with 10% is for goods (section 62.1 IRR / Manufacturing Defects) - may retain 10% for goods every progress payment as warranty

for infra projects... you dont retain anymore? how come?
when do you require the contractor with warranty?

nissih_2001 wrote:i am just confused lang po about the retention money. is this the warranty stated in sec 62 of the r.a 9184, that when claimed by the contractor, they will post a bank guarantee of 10%, if LC 5% or if surety bond 30% of the contract prize? or the contractor will just replace the retention money with a surety bond equivalent to the retention money upon collection? thanks

For the procurement of Goods
The imposition of warranty for the procurement of goods is specifically mentioned in Section 62.1 of the revised IRR of R.A. 9184. Furthermore, Section 62.1 of the IRR, merely provided for the warranty period (minimum of 3 months in case of expendable supplies, or a minimum of 1 year in case of non expendable supplies), and the percentage provided for the retention money that will be impose on the conract (equal to at least 10% of every progress payment) or in form of special bank guarantee (equal to at least 10% of the total contract price.)
For the procurement of Infrastructure
By virtue of the Section 62.2.3.3 of the revised IRR, contractors (for infrastructure projects ) are mandated to post warranty security and to perform its responsibililities as mentioned in section 62.2.3.1 (a).
However in reference to the undeline bold text, for the procurement of Goods, the IRR is clear as to the form that is acceptable in the posting of the RM , meanwhile for the procurement of infra, surety bond is specifically mention, so in my opinion you can replace the RM (in form Cash), with a surety bond.

nissih_2001 wrote:for infra projects... you dont retain anymore? how come?
when do you require the contractor with warranty?

excerpt from annex E of the revised IRR
6. RETENTION MONEY
6.1. Progress payments are subject to retention of ten percent (10%) referred to as the "retention money." Such retention shall be based on the total amount due to the contractor prior to any deduction and shall be retained from every progress payment until fifty percent (50%) of the value of works, as determined by the procuring entity, are completed. If, after fifty percent (50%) completion, the work is satisfactorily done and on schedule, no additional retention shall be made; otherwise, the ten percent (10%) retention shall be imposed.

nissih_2001 wrote:for infra projects... you dont retain anymore? how come?
when do you require the contractor with warranty?

Please read the warranty provision sa revised IRR of RA 9184 and then pag meron hindi malinaw you could ask again po.

nissih_2001 wrote:i am just confused lang po about the retention money. is this the warranty stated in sec 62 of the r.a 9184, that when claimed by the contractor, they will post a bank guarantee of 10%, if LC 5% or if surety bond 30% of the contract prize? or the contractor will just replace the retention money with a surety bond equivalent to the retention money upon collection? thanks

Retention money is warranty for hidden defects during construction, including the 1-year defects liability period after project completion. Retention money is therefore released after the end of the 1-year defects liability period and when the certificate of acceptance is already issued. If the contractor wants the release of the retention money before the lapse of the 1-year defects liability period, replacement by the surety bond may be allowed.

The warranty security on the other hand will cover for structural defects and/or structural failures after acceptance of the project. Under the revised IRR the warranty security period has been reduced to only one year.

RDV wrote:
The warranty security on the other hand will cover for structural defects and/or structural failures after acceptance of the project. Under the revised IRR the warranty security period has been reduced to only one year.

i if get it right RDV, after the issuance of Acceptance Certificate, di na magbbayad ang contractor nang warranty, say: Building- 15 year warranty. meaning to say yung 14 years the PE na ba ang magbbayad?

riddler wrote:

RDV wrote:
The warranty security on the other hand will cover for structural defects and/or structural failures after acceptance of the project. Under the revised IRR the warranty security period has been reduced to only one year.

i if get it right RDV, after the issuance of Acceptance Certificate, di na magbbayad ang contractor nang warranty, say: Building- 15 year warranty. meaning to say yung 14 years the PE na ba ang magbbayad?

The contractor will only post a warranty security for one (1) year. Kung permanent structure, the warranty period is still 15 years, but the remaining 14 years will no longer be covered by a warranty security. In case structural damage or failure happens during that period, the procuring entity could still run after the contractor in some other way.

There is no reason why the procuring entity would pay for the warranty security, since it is the contractor that is the one giving that warranty.

RDV @ GPPPI wrote:

nissih_2001 wrote:i am just confused lang po about the retention money. is this the warranty stated in sec 62 of the r.a 9184, that when claimed by the contractor, they will post a bank guarantee of 10%, if LC 5% or if surety bond 30% of the contract prize? or the contractor will just replace the retention money with a surety bond equivalent to the retention money upon collection? thanks

Retention money is warranty for hidden defects during construction, including the 1-year defects liability period after project completion. Retention money is therefore released after the end of the 1-year defects liability period and when the certificate of acceptance is already issued. If the contractor wants the release of the retention money before the lapse of the 1-year defects liability period, replacement by the surety bond may be allowed.

The warranty security on the other hand will cover for structural defects and/or structural failures after acceptance of the project. Under the revised IRR the warranty security period has been reduced to only one year.

Aside from hidden defects or uncorrected discovered defects, the retention money will also answer for third party liabilities.

RDV @ GPPPI wrote:

RDV @ GPPPI wrote:

nissih_2001 wrote:i am just confused lang po about the retention money. is this the warranty stated in sec 62 of the r.a 9184, that when claimed by the contractor, they will post a bank guarantee of 10%, if LC 5% or if surety bond 30% of the contract prize? or the contractor will just replace the retention money with a surety bond equivalent to the retention money upon collection? thanks

Retention money is warranty for hidden defects during construction, including the 1-year defects liability period after project completion. Retention money is therefore released after the end of the 1-year defects liability period and when the certificate of acceptance is already issued. If the contractor wants the release of the retention money before the lapse of the 1-year defects liability period, replacement by the surety bond may be allowed.

The warranty security on the other hand will cover for structural defects and/or structural failures after acceptance of the project. Under the revised IRR the warranty security period has been reduced to only one year.

Aside from hidden defects or uncorrected discovered defects, the retention money will also answer for third party liabilities.

Just to add:

the retention money mentioned for goods actually refer to a method of covering for the warranty security (it could either be rentention money of 10% for every progress payment or a 10% special bank quarantee section 62.1)

the rentention for infra can be found under item 6 Annex E of the IRR "Contract iMPLEMENTATION gUIDELINES for the procurement of infra". this is on top of the warranty security required for infra under 62.2.