Earnest money, security deposit, and retention money are all forms of financial guarantees required for construction contracts.
[1] Earnest money is paid upfront by the contractor to keep their bid open, and is forfeited if they fail to accept the work. Security deposit is the money deposited by the successful bidder and can be used to pay for compensation if work is not completed properly.
[2] Retention money is held back from progressive payments to the contractor until the end of the maintenance period, and acts as a guarantee against defects claims. It serves a similar purpose to security deposit but is deducted incrementally throughout the project.
[3] The key difference is that security
Earnest money, security deposit, and retention money are all forms of financial guarantees required for construction contracts.
[1] Earnest money is paid upfront by the contractor to keep their bid open, and is forfeited if they fail to accept the work. Security deposit is the money deposited by the successful bidder and can be used to pay for compensation if work is not completed properly.
[2] Retention money is held back from progressive payments to the contractor until the end of the maintenance period, and acts as a guarantee against defects claims. It serves a similar purpose to security deposit but is deducted incrementally throughout the project.
[3] The key difference is that security
Earnest money, security deposit, and retention money are all forms of financial guarantees required for construction contracts.
[1] Earnest money is paid upfront by the contractor to keep their bid open, and is forfeited if they fail to accept the work. Security deposit is the money deposited by the successful bidder and can be used to pay for compensation if work is not completed properly.
[2] Retention money is held back from progressive payments to the contractor until the end of the maintenance period, and acts as a guarantee against defects claims. It serves a similar purpose to security deposit but is deducted incrementally throughout the project.
[3] The key difference is that security
Money By- Charu Shroff (M030) Sameer Siddique (M031) Shresth Suneja (M032) Earnest Money Assurance or guarantee in form of cash By the contractor to keep his offer open for consideration Confirm his intentions to take up the accepted work as per terms and conditions in the tender In case of failure, amount forfeited to government No interest is payable to the contractors Earnest Money If < Rs. 250/-, cash deposit in Divisional or Sub- divisional office If > Rs. 250/-, deposit in Treasury/Bank Or deposit in form of Deposit at call Receipt of a scheduled bank duly guaranteed by RBI. Works upto Rs. 5,00,000/- @ 2-1/2% of estimated cost as earnest money, max of Rs. 10,000/- Works above Rs. 5,00,000/- @ 2% of estimated cost as earnest money, max of Rs. 20,000/- Return of earnest money Except three lowest tenderes should be returned within a week from date of receipt of the tenders Second and third lowest tenderes should be returned within 15 days od acceptance of tender, if offer is not considered Earnest money of lowest tenderer whose tender is accepted is retained as security deposit for due performance of contract Security Deposit Money that should be deposited by the contractor whose tender has been accepted It renders himself liable to the department If work is not carried out according to the specifications, time limit & condition of contract it pays for the compensation amounting part/whole of his security. Earnest money deposited at the time of tender is treated as security money. Security Deposit Additional money of security money is deducted from progressive bills. Above 1 lakh (10% on 1st lakh & 7.5% on the balance) Above 2 lakh (10% on 1st lakh, 7.5% on 2nd lakh & 5% on balance) Subject to a max of 1 lakh only is deducted from the progressive bill. Security deposit is refundable after prescribed maintenance period In order to relief to the contractor a percentage (normally 50%) of the security money is refunded for Retention Money When any claim for payment arises out of or under the contract against the contractor. Engineer in-charge is entitled to withhold & also have lien to retain sum or sums in whole or in part from security deposit till finalization or adjustment of any such claim If security deposit is insufficient to cover the claim, the engineer in-charge is entitled to withhold and have lien to retain from any sum or sums found payable to the contractor under the same contract or any other contract pending finalisation or adjustment of any such claim. Security Deposit Vs Retention Money