🇦🇪UAE

تأخر الاسترجاع النقدي من مبالغ الاحتفاظ بها (Retention Hold)

1 verified sources

Definition

Retention is split: 50% released at practical completion; 50% released after 1-year defect liability period. If work signed off Dec 2024, 50% released Dec 2024, remaining 50% held until Dec 2025. During this 12-month gap, contractor carries cost of borrowed capital or foregoes other uses of cash.

Key Findings

  • Financial Impact: For AED 5M in average retention across 10 projects: financing cost at 5% = AED 250,000/year. Estimated range for mid-size contractor (AED 20-50M annual turnover): AED 100,000–500,000 annual working capital cost due to retention delays.
  • Frequency: Annual (per project completion cycle); cumulative across portfolio
  • Root Cause: Standard industry practice in UAE (FIDIC-based contracts); defect liability period enforcement; no statutory acceleration mechanism for early release upon proof of performance

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Building Finishing Contractors.

Affected Stakeholders

Finance Director, Treasury Manager, Contract Manager

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

تأخر السداد والتدفق النقدي المتأثر من شهادات الدفع المرحلي

9.7-16.3% monthly inflow reduction (average 12.4%); for a AED 5M annual turnover contractor, this equals AED 485,000–815,000 annual cash flow loss. 70% of UAE contractors report payment delays threaten business viability.

مخاطر الامتثال لضريبة القيمة المضافة على شهادات الدفع المرحلي والاحتفاظ

AED 5,000–25,000 per missed quarterly VAT filing (FTA penalties for late/incorrect returns); estimated 10-15% of contracts have retention VAT misclassification. For AED 10M annual turnover with 10% average retention, estimated VAT mismatch = AED 50,000–100,000 over contract lifecycle.

عبء العمل اليدوي لتتبع شهادات الدفع والتحقق من وثائق الإنجاز

20-40 hours/month per project × AED 150–250/hour = AED 3,000–10,000/month per project. For 5 concurrent projects: AED 15,000–50,000/month (AED 180,000–600,000 annually). Opportunity cost: delayed invoice processing extends AR cycle by 7-14 days.

خسائر الفواتير المفقودة والتسعير الخاطئ في شهادات الدفع المرحلي

Estimated 2-4% of contract value lost to revenue leakage per project. For AED 5M contract: AED 100,000–200,000 loss. Across 10 projects annually: AED 1–2M. Industry benchmark (construction audit firms): 2.5% average revenue leakage in manual billing systems.

عدم القدرة على اتخاذ قرارات التسعير والموارد بسبب عدم توفر البيانات في الوقت الفعلي

Estimated cost overrun visibility gap: 5-10% of labor costs remain undetected until post-facto. For AED 50M contractor with 30% labor cost ratio (AED 15M labor annually): undetected overruns = AED 750,000–1.5M annually.

تسرب الإيرادات من أوامر التغيير غير الموثقة

AED 100,000–500,000 per project (estimated 5–10% of typical AED 2–5M contract value lost to non-payment or disputed claims on unbilled variations). Frequency: 2–4 disputed variation claims per year on typical medium-sized project.

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