Utah Contractor Practice Exam

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What term refers to the process of withholding funds to ensure project completion?

Stipulation
Retention
Umbrage
Remainder

The correct answer is: Retention

The term that refers to the process of withholding funds to ensure project completion is retention. In the construction and contracting industry, retention is a common practice where a portion of the payment due to the contractor is withheld until the project is completed satisfactorily. This money serves as a financial incentive for the contractor to address any issues or defects that may arise during or after the construction process. It protects the project owner from incomplete work and motivates the contractor to fulfill all obligations to the expected standards before full payment is issued. Other options do not correctly describe this financial management strategy. Stipulation generally refers to a specific requirement or condition within a contract rather than a financial withholding method. Umbrage relates to taking offense, which has no connection to project funding or completion statuses. Remainder refers to what is left after a part has been removed or dealt with, which again does not capture the specific action of withholding funds for project assurances.