A punch list holdback is a portion of the final project payment that is withheld until all outstanding punch list items are completed. This ensures that contractors address any minor defects or unfinished work before receiving full payment.
Why Punch List Holdbacks Are Necessary
Owners and general contractors use holdbacks as leverage to ensure subcontractors complete all final work. Without a holdback, contractors may deprioritize minor fixes after Substantial Completion.
Managing Punch List Holdbacks Effectively
- Set clear deadlines for punch list completion to avoid unnecessary delays
- Clearly define holdback amounts in the contract, typically 1-5% of the contract value
- Conduct a final walkthrough to verify that all punch list items have been addressed
Related Terms: Substantial Completion, Retainage, Final Inspection, Defect Liability Period
FAQs
How much is typically held back for punch list items?
A: Usually 1-5% of the total contract value, depending on the scope of remaining work.
When is the holdback released?
A: Once all punch list items have been completed and approved by the owner.