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Release of retention against bank gurantee.

6 replies [Last post]
Wed, 2006-11-08 02:46
Mohamed Sahir
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Hi PP Friends,

Is it acceptable to release retention against bank gurantee?? The contact is FIDIC based and has no special provision for this.
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Replies

Thu, 2006-11-23 08:44
#1
Dayanidhi Dhandapany
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Hi Edwin,

What is the version of FIDIC you are referring, In our contract, we are using FIDIC Fourth Edition 1987, reprinted in 1988. I could not find anything about releasing of retention money against bank guarantee(5%) under the clause 60.3(payment of retention money).

Here it is a common practice and also mentioned in the contract agreement that remaining half of the retention money can be released against the bank guarantee.

please leave me your email id so that we can discuss further.

Cheers!!!

Daya
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Sun, 2006-11-19 06:26
#2
Shahzad Munawar
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In lieu of stated Clause, it is not essential to get any consent from the Employer in respect of release of Retention Money but as the amount reaches a limit, as per said provision the Contractor should submit his invoice alongwith bank guarantee equal to amount of Retention Money.
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Sun, 2006-11-19 05:51
#3
Edwin kolandasamy
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Hi Ahmed Farouk

I would like add something...
I have checked the previous job contract form, ie FIDIC the retention sum clause was ammended as below.

Sub Clause 60.5 - Retention sum
"A retention amounting to 10 percent of the amount due, determined in accordance with the procedure set out in Sub clause 60.1(h) shall be made by the Engineer in the first and following interim payment cert, until the amount so retained reaches a limit of retention money as stated in the Appendix to tender (5% of contract sum). The contractor may, at his option, replace the retention amount with an unconditional bank gurantee from a bank acceptable by the Employer".

But i think that first u must get the employer consent before you proceed futher.

bye.
Edwin
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Sat, 2006-11-11 02:27
#4
Ahmed Farouk
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I totally agree with Edwin
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Fri, 2006-11-10 05:37
#5
Edwin kolandasamy
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Hi Mr. Tahir,

In my opinion you can do so if the client agrees.
I suggest you write in a letter to the Client and cc to your consultant requesting for release of retention (which was withheld by client) by providing bank guareetee (non cash value).

In my project currently in Kolkata India, we managed to get the approval of the client by producing proper financial documents indicating our cash flow. Further to that our project was nearly 60% completed at the moment they released it. And our progress was good in line with our master programme. It is FIDIC contract too. There is no provision for such a release in FIDIC contract i am aware of that. Back in Malaysia we used to do it in Govt Projects.

So i hope i have give you some ideas.

Regards,
Edwin
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Thu, 2006-11-09 21:55
#6
Tommy king
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your bank gurantee is it refering to Perfoamnce Bond ??
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