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    Question

    If the Value of work certified is 300000 and the Value

    of Work uncertified is 100000, and the contractee is paying 180000 to the contractor, then what is the retention ratio?
    A 25% Correct Answer Incorrect Answer
    B 20% Correct Answer Incorrect Answer
    C 42.86% Correct Answer Incorrect Answer
    D 40% Correct Answer Incorrect Answer
    E 35% Correct Answer Incorrect Answer

    Solution

    Value of work certified = ₹3,00,00
    Cash paid = ₹1,80,000

    Retention money = amount held back from payment = 3,00,000 − 1,80,000 = ₹1,20,000 Retention Ratio =Retention Money/Work Certified=1,20,000/3,00,000=40% Note - Work uncertified (₹1,00,000) is ignored while calculating retention ratio; retention applies only on work certified. Usually the full amount amount of Work certified is not paid by the contractee and he may pay a fixed %, say 80% or 90% of the Work Certified – depending on the terms of the contract. This is known as Cash Ratio. The balance amount not paid is known as retention Money. This acts as a type of security for any defective work which may be found in the contract later on.

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