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Retention and mobilization advance calculator
Work out what each running bill of a contract actually pays: the retention money held, the mobilization advance recovered and the income tax withheld, bill by bill, with the net payable, the retention still held and when it comes back.
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Calculator
Work out your running bills
Give the contract price and its terms, then the gross value of each running bill. Retention, advance recovery, tax and the net payable follow as you type.
Your running bills
- Retention held
- Rs 50 lakhThe limit
- Advance to recover
- Rs 36.25 lakhOf Rs 1.5 crore paid
- Income tax withheld
- Rs 58.4 lakh8% of each bill
- Received so far
- Rs 6.58 croreThe advance and every net payment
Bill 5
- Work in this billRs 7.3 crore to date
- Rs 12,000,000
- Retention, 7%Reaches the limit
- -Rs 730,000
- Advance recovered
- -Rs 2,100,000
- Income tax, 8%
- -Rs 960,000
- Net payable
- Rs 8,210,000
Retention to be released
- On completion, 50%With the taking-over certificate
- Rs 2,500,000
- After the defects period, 50%12 months after completion
- Rs 2,500,000
- Retention held
- Rs 5,000,000
Income tax is worked out on each bill's gross value, the way most employers deduct it, with none on the advance. Tax rates for tax year 2027, as of September 2026: confirm them with the FBR or a tax adviser.
Your contract
Bill by bill
Rs 100,000,000 (10 crore) contract, with a mobilization advance of Rs 15,000,000 (1.5 crore) paid before bill 1: what each running bill holds back and pays.
| Bill | Work this bill (Rs) | Work to date (Rs) | Retention (Rs) | Advance recovered (Rs) | Income tax (Rs) | Net payable (Rs) | Retention held (Rs) | Advance left (Rs) |
|---|---|---|---|---|---|---|---|---|
| Bill 1 | 8,000,000 | 8,000,000 | 560,000 | 0 | 640,000 | 6,800,000 | 560,000 | 15,000,000 |
| Bill 2 | 15,000,000 | 23,000,000 | 1,050,000 | 2,625,000 | 1,200,000 | 10,125,000 | 1,610,000 | 12,375,000 |
| Bill 3 | 20,000,000 | 43,000,000 | 1,400,000 | 3,500,000 | 1,600,000 | 13,500,000 | 3,010,000 | 8,875,000 |
| Bill 4 | 18,000,000 | 61,000,000 | 1,260,000 | 3,150,000 | 1,440,000 | 12,150,000 | 4,270,000 | 5,725,000 |
| Bill 5 | 12,000,000 | 73,000,000 | 730,000 | 2,100,000 | 960,000 | 8,210,000 | 5,000,000 | 3,625,000 |
| Total | 73,000,000 | 5,000,000 | 11,375,000 | 5,840,000 | 50,785,000 | 5,000,000 | 3,625,000 |
Each bill's deductions depend on the bills before it: retention stops at its limit and recovery stops once the advance is repaid. The conditions of your contract decide the exact rules.
Common practice
Usual terms in Pakistani standard contracts
The Pakistan Engineering Council's standard bidding documents for works, which most public contracts use. Your own contract's figures are the ones that count.
| Term | PEC 2023 (FIDIC 2017) | PEC 2007 civil works (FIDIC 1987) | PEC 2007 smaller contracts |
|---|---|---|---|
| Mobilization advance | 15% of the contract, against a bank guarantee | Up to 15%, interest-free, in two halves against a bank guarantee | 10% of the contract, against a bank guarantee |
| Advance recovered | 17.5% of each IPC from the 2nd, all back before 90% is certified | In equal instalments, from the end of the 3rd month to 2 months before completion | Within the payment terms: 10% advance, 75% in interim payments, 10% on completion, 5% after the defects period |
| Retention | 7% of each IPC | 10% of each IPC | 5% of each payment |
| Limit of retention | 5% of the contract price | 5% of the contract price | None stated |
| Retention released | Half at taking-over, half when the defects period ends | Half at taking-over, half when the defects liability period ends | All of it, 14 days after the defects period |
| Defects period | Preferably 365 days | Set by the employer | Set by the employer |
From the Contract Data and Particular Conditions of each document, read in September 2026. These are contract terms, not law.
How it is worked out
From the gross bill to the cheque
A running bill, or interim payment certificate (IPC), values the work done since the last one: the quantities measured on site at the contract's rates. That gross value is where every deduction starts. On the example, a Rs 10 crore contract, bill 3 certifies Rs 2 crore of work and takes the work done to Rs 4.3 crore. Where an IPC shows only the work done to date, take off the previous bill's figure, or switch the calculator to Work done to date.
Retention money is a percentage of each bill, held back as security against defects until the total reaches its limit. On PEC's standard terms that is 7% of each bill up to 5% of the contract price, Rs 50 lakh on the example. Bill 3 holds Rs 14 lakh. Bill 5 would hold Rs 8.4 lakh, but only Rs 7.3 lakh is left under the limit, and later bills hold nothing.
The mobilization advance, 15% of the contract or Rs 1.5 crore, is paid before work starts against a bank guarantee and comes back out of the bills. PEC's documents take 17.5% of each bill from the 2nd: bill 3 repays Rs 35 lakh, and after five bills Rs 36.25 lakh is still owed. At that rate the advance takes 85.7% of the contract's work to repay, and with bill 1's 8% before it that runs past 90%, so the bill that takes the work to 90% pays whatever is left in one larger deduction.
Other contracts recover the advance in step with the work: nothing until the work reaches one stage, all of it by another, and in proportion in between. Recovered to date = advance × (work to date - start) ÷ (end - start). A 15% advance recovered between 20% and 80% of the work takes 15 ÷ 60 = 25% of every bill in between.
Income tax is withheld under section 153(1)(c) of the Income Tax Ordinance on the gross amount: in tax year 2027, 8% for an individual or firm on the Active Taxpayers List, 7.5% for a company, and double for those not on it. What is left is the cheque: net payable = gross - retention - advance recovered - tax. For bill 3 that is Rs 2 crore - Rs 14 lakh - Rs 35 lakh - Rs 16 lakh = Rs 1.35 crore.
Where the terms come from
What Pakistani contracts usually say
These are contract terms, not law. The figures come from the contract itself, usually its Contract Data, Appendix to Bid or Particular Conditions, and a contract can set any it likes. Most public works in Pakistan, and many private ones, use the Pakistan Engineering Council's standard bidding documents, and the calculator opens on their current terms.
PEC's standard documents for construction works of December 2023, built on the FIDIC 2017 conditions, set an advance of 15% of the contract amount, repaid at 17.5% of each IPC from the 2nd and in full before 90% of the contract is certified; retention of 7% of each IPC up to 5% of the contract price; a defects period of preferably 365 days; and a performance security of 10%, halved when the works are taken over. An IPC is normally paid within 28 days, and late payment carries financing charges at KIBOR plus 3% a year.
Many contracts still run on PEC's 2007 forms. The civil works form, on the older FIDIC conditions, holds 10% of each bill up to 5% of the contract, so the limit is reached once 50% of the work is billed, against 71% on the 2023 terms. It pays an interest-free advance of up to 15% in two halves and recovers it in equal monthly instalments, from the end of the third month to two months before completion, which this calculator does not model: take those instalments off each bill yourself. The form for smaller contracts pays a 10% advance and holds 5% until the defects period ends.
Where a contract names no figures of its own, FIDIC's conditions start recovering the advance once 10% of the contract is certified and take 25% of each certificate until it is repaid, and release half the retention at taking-over and the rest when the defects period ends. Private contracts set their own terms, so read the payment clauses of yours before relying on any of these. Terms and tax rates as of September 2026.
Terms
Words a contract uses
- Running bill (IPC)
- The contractor's bill for the work done since the last one, usually monthly, checked and certified by the engineer as an interim payment certificate. It shows the work in this bill, the work to date and every deduction.
- Retention money
- The share of each bill the employer holds back as security for defects. It is the contractor's money, usually paid back in two halves: on completion and when the defects period ends.
- Limit of retention money
- The most retention held at once, usually 5% of the contract price. Once it is reached, later bills are paid with no retention taken.
- Mobilization advance
- Money paid before work starts, usually interest-free, to set up the site and bring in plant, secured by a bank guarantee and recovered from the running bills. FIDIC calls it the advance payment.
- Secured advance
- Payment for non-perishable materials brought to site but not yet built in, up to 75% of their cost under PEC's 2007 civil works form, recovered from the bills as the materials are used.
- Taking-over certificate
- The engineer's certificate that the works are complete and handed over. It releases the first half of the retention and starts the defects period.
- Defects liability period
- The time after completion, usually a year, in which the contractor puts right any defect at their own cost. FIDIC's 2017 conditions call it the defects notification period.
- Performance security
- A bank guarantee, 10% of the contract price on PEC's terms, given when the contract is signed and called only if the contractor defaults. It is separate from retention, which is cash held out of the bills.
Questions
Retention money questions
Still have a question?
Ask our team during Pakistan business hours, in English or Urdu.
+92 333 2466662Chat on WhatsAppWhat is retention money in construction?
The part of each running bill the employer holds back as security against defects. On PEC's standard terms it is 7% of each bill until the total reaches 5% of the contract price, Rs 50 lakh on a Rs 10 crore contract. Half comes back when the works are taken over and the rest when the defects period ends, usually a year later.
What is the usual retention money percentage in Pakistan?
PEC's 2023 standard documents hold 7% of each bill up to 5% of the contract, its 2007 civil works form 10% of each bill up to 5%, and its form for smaller contracts 5%. Private contracts set their own. The limit matters as much as the percentage: at 7% of each bill, a 5% limit is reached once about 71% of the work is billed.
How is a mobilization advance recovered from the running bills?
Two ways are common. As a share of each bill: PEC's documents take 17.5% of each IPC's gross value from the 2nd IPC until the 15% advance is repaid, and whatever is left comes off the bill that takes the work to 90%. In step with the work: recovered to date = advance × (work to date - start) ÷ (end - start), so every bill between the two stages repays the advance ÷ (end - start) of its value. PEC's 2007 civil works form uses equal monthly instalments instead.
How do you calculate a running bill?
Value the work done to date at the contract rates, take off the previous bill's work to date to get this bill's gross value, then deduct retention, advance recovery and income tax, and anything else the contract provides for, such as a secured advance on materials. On the example, bill 3 is Rs 2 crore - Rs 14 lakh retention - Rs 35 lakh advance - Rs 16 lakh tax = Rs 1.35 crore.
When is retention money released?
Under FIDIC-based contracts, PEC's among them, half when the taking-over certificate is issued and the other half when the defects period ends, 365 days later on PEC's 2023 terms. PEC's form for smaller contracts pays it all within 14 days after the defects period. If defects are still being put right when it ends, the engineer can hold back what that work will cost.
Is income tax deducted on retention money?
Income tax under section 153(1)(c) is withheld from the gross amount payable. Most employers deduct it on each bill's full gross value, retention included, so nothing more is taken when the retention is released; some deduct it only as they pay, including on the retention when it comes back. The total is the same either way. In tax year 2027 the rate is 7.5% for a company and 8% for an individual or firm on the Active Taxpayers List, and double for those not on it. Confirm how it applies to you with a tax adviser or the FBR.
Is a mobilization advance interest-free?
Usually. FIDIC's conditions make the advance payment an interest-free loan for mobilisation, and PEC's 2007 civil works form says so in terms. It is secured by a bank guarantee for the full amount, which FIDIC lets the contractor reduce as the advance is repaid, so the real cost is the bank's guarantee commission. A contract can still charge interest, so check its terms.
What is the difference between retention money and performance security?
Performance security is a bank guarantee, 10% of the contract price on PEC's terms, given at the start to cover the whole contract; no money changes hands unless it is called. Retention is cash kept out of each bill against defects. PEC's 2023 terms halve the performance security at taking-over, when the first half of the retention also comes back.
Keep every running bill straight
Smart Construction keeps running bills, retention and advances straight on every contract, so you always know what has been certified, what has been paid and what is still held.
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