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# Construction Law/Calculation of Total Retention money

Question
Dear Femi,

We are undertaking a construction project in Pakistan,and the BOQ rates are written in PAK Rupees, and the currenies of payment named in the Appendix to tender are Pak Rupees and US Dollars （50% in Rupees, 50% in US Dollars with exchange rate on the date of approval of respective payment certificate.)

For every deduction of retention money (5% of the amount of work done), it was made in the above mention currencies and exchange rate.

For example:
IPC#1, the amount of work done is 100millions, 5% Retenion money is 5 millions, so the actual deduction of retention is 2.5 million Pak Rupee + 25000 US dollars (current exchange rate for this IPC is 1 dollar= 100 rupees).

IPC#2, the amount of work done is 44millions, 5% retention money is 2.2 millions, so the actual deduction of retention is 1.1 million Pak Rupee + 10000 US dollars (current exchange rate for this IPC is 1 dollar = 110 rupees)

The question is how to calculate the total amount of retention money after the performance certificate, there are two calculation as following:
1. total amount = actual deduction 3.6(2.5+1.1) million Pak Rupee  & 35000 (25000+10000) US Dollars.

2. total amount of retention in Pak Rupees = 5+2.2=7.2 million, then 50% payment in Pak Rupees = 7.2*50%= 3.6 millions, and 50% payment in US dollars = 7.2*50%/120=30000 US Dollars （current exchange rate is 1 dollar = 120 rupees)

Your early response will be highly apprecaited.

Regards,

Jack Jiang

Dear Jiang,

You need to make things easy for yourself. Since the currency in the BOQ is PAK Rupees, all your certificates and interim payment calculations should be in PAK Rupees and only on the final figure for payment should be converted in 50% - 50% of the PAK Rupees and thereafter, one part of the 50% PAK Rupees can be converted to USD for payment. The same thing is applicable to retention. Do all your valuations and certified amount calculations in PAK Rupees. Then, the final figure (retention) - one part of it, can then be converted (i.e. 50% of it) to USD and to be recommended to the Client that way in two summaries as follows:
First Part - to be paid in PAK Rupees - 50% of total retention being XXXX Rupees =  XXXXX Rupees
Second Part - to be paid in USD - 50% OF Total retention in Rupees = XXX Rupees multiplied by the exchange rate of Ruees to USD = YYYY USD.
Check out if there is a reference for the exchange rate because, sometime, a date (or rate) could be pegged as a reference date or rate for the exchange rate; check and apply it accordingly.

This should clear you doubts, i guess.

Thanks

Femi
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#### Femi Alofe

##### Expertise

I can answer all questions relating to the followings: 1. Contract Administration - variations, contract clauses interpretation, all post contract procedures, valuations and certificates questions, extension of time issues and prolongation cost matters. 2. Contract Practice - Any questions regarding forms of contract like JCT, FIDIC & other Bespoke forms. 3. Quantification, measurements and Estimating questions 4. Contracts and construction law questions and dispute resolutions problems. 5. All FIDIC Conditions of contracts

##### Experience

Out of my 24 years experience in construction industry, i have the following specific experience: 1. Contract Administration - 15 years in contract administration with over 10yrs in Managerial positions covering africa and the middleeast. 2. Contract Practice - 15 years experience with over 10yrs in Managerial and expert positions covering africa, north america and the middleeast. 3. All pre-contract procedures, Tendering, Quantification, measurements and Estimating questions - 20 years experience. 4. Contracts and construction law questions and dispute resolutions problems - 15 years experience with over 10yrs in Managerial and expert positions and 5 years expert witness and active practice in arbitration proceedings covering africa and the middleeast.

Organizations
1. FAIQS - Fellow, Australian Institute of Quantity Surveyors, Australia 2. FRICS - Fellow, Royal Institution of Chartered Surveyors, UK 3. CCP - Certified Cost Professional AACEI, USA 4. PQS - CIQS, CANADA 5. ACIArb. - CIArb, UK 6. MNIQS - NIQS, NIGERIA 7. RQS - QSRBN, NIGERIA

Publications
1. AACEI RP on Estimating, 2010

Education/Credentials
1. B.Tech (QS) 2. RICS professional course, CEM - UK 3. MSc , UK NARIC 4. Professional Doctorate ( to commence 2016)

Past/Present Clients
1. Larsen & Toubro Ltd, Dubai UAE 2. Larsen & Toubro (oman) LLC 3. Archi + Web consortium, Abuja Nigeria 4. George Dike & Associates, Minna Nigeria 5. Public works Authority (Ashghal), Doha Qatar