What does the term "retainage" mean in construction contracts?

The term "retainage" in construction contracts refers to a portion of the agreed-upon payment that is withheld by the project owner until the completion of the project. This practice serves as a financial incentive for the contractor to complete the work to the owner's satisfaction and ensures that any potential issues with quality or incomplete work can be rectified before the final payment is made. Retainage typically helps to safeguard the interests of the owner, encouraging the contractor to maintain high standards throughout the project. This concept is widely used in the construction industry to manage risk and maintain quality assurance during the project timeline.

The other options do not align with the definition of retainage, as they address unrelated aspects of construction contracts, such as insurance, payment structures, or deadlines.