A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]

The practice of cash retention has been identified to be an opportunity cost to the contractor, equivalent to interest loss on cash retained, which could amount to a huge sum for larger contract. Literature revealed the use of retention bond as the best solution to the problems of cash retention. He...

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Main Authors:	Ganiyu, Bashir Olanrewaju, Ola-awo, Wasiu Adeniran, Adetoro, Kabir, Umar, Moh’d Kabir
Format:	Article
Language:	English
Published:	Faculty of Architecture, Planning & Surveying 2015
Subjects:	Financial management. Business finance. Corporation finance Cash position. Cash management
Online Access:	http://ir.uitm.edu.my/id/eprint/14655/ http://ir.uitm.edu.my/id/eprint/14655/ http://ir.uitm.edu.my/id/eprint/14655/1/AJ_BASHIR%20O.%20GANIYU%20BEJ%2015.pdf

id	uitm-14655
recordtype	eprints
spelling	uitm-146552020-03-21T00:48:05Z http://ir.uitm.edu.my/id/eprint/14655/ A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.] Ganiyu, Bashir Olanrewaju Ola-awo, Wasiu Adeniran Adetoro, Kabir Umar, Moh’d Kabir Financial management. Business finance. Corporation finance Cash position. Cash management The practice of cash retention has been identified to be an opportunity cost to the contractor, equivalent to interest loss on cash retained, which could amount to a huge sum for larger contract. Literature revealed the use of retention bond as the best solution to the problems of cash retention. Hence, the need to evaluate and compare the cost of ‘cash retention’ and ‘retention bond’ costs to the contractor. This study will assist in improving payment practice in the construction industry and also improves financial stability of the contractor. Data were collected from interim valuations of completed projects and subsequently analyzed using “compounding method” to evaluate the compound interest loss on cash retained by the client and the cost of providing retention bond in-lieu of cash retention. T-test analysis was further used to determine the level of significance of the difference between both costs. The results of both analyses reveal that there is a significant difference between both cost and the utilization of retention bond in-lieu of cash retention will reduce the cost of retention by 65%. Subsequent to the findings of this research, it is therefore suggested that, clients should adopt retention bond in-place of cash retention as this will reduce the cost of retention to the contractor, while still providing adequate level of security to the clients’ money. Faculty of Architecture, Planning & Surveying 2015 Article PeerReviewed text en http://ir.uitm.edu.my/id/eprint/14655/1/AJ_BASHIR%20O.%20GANIYU%20BEJ%2015.pdf Ganiyu, Bashir Olanrewaju and Ola-awo, Wasiu Adeniran and Adetoro, Kabir and Umar, Moh’d Kabir (2015) A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]. Built Environment Journal (BEJ), 12 (1). pp. 26-33. ISSN 1675-5022 https://bej.uitm.edu.my/
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Teknologi MARA
building	UiTM Institutional Repository
collection	Online Access
language	English
topic	Financial management. Business finance. Corporation finance Cash position. Cash management
spellingShingle	Financial management. Business finance. Corporation finance Cash position. Cash management Ganiyu, Bashir Olanrewaju Ola-awo, Wasiu Adeniran Adetoro, Kabir Umar, Moh’d Kabir A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]
description	The practice of cash retention has been identified to be an opportunity cost to the contractor, equivalent to interest loss on cash retained, which could amount to a huge sum for larger contract. Literature revealed the use of retention bond as the best solution to the problems of cash retention. Hence, the need to evaluate and compare the cost of ‘cash retention’ and ‘retention bond’ costs to the contractor. This study will assist in improving payment practice in the construction industry and also improves financial stability of the contractor. Data were collected from interim valuations of completed projects and subsequently analyzed using “compounding method” to evaluate the compound interest loss on cash retained by the client and the cost of providing retention bond in-lieu of cash retention. T-test analysis was further used to determine the level of significance of the difference between both costs. The results of both analyses reveal that there is a significant difference between both cost and the utilization of retention bond in-lieu of cash retention will reduce the cost of retention by 65%. Subsequent to the findings of this research, it is therefore suggested that, clients should adopt retention bond in-place of cash retention as this will reduce the cost of retention to the contractor, while still providing adequate level of security to the clients’ money.
format	Article
author	Ganiyu, Bashir Olanrewaju Ola-awo, Wasiu Adeniran Adetoro, Kabir Umar, Moh’d Kabir
author_facet	Ganiyu, Bashir Olanrewaju Ola-awo, Wasiu Adeniran Adetoro, Kabir Umar, Moh’d Kabir
author_sort	Ganiyu, Bashir Olanrewaju
title	A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]
title_short	A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]
title_full	A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]
title_fullStr	A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]
title_full_unstemmed	A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]
title_sort	comparative analysis of the cost of cash retention and retention bond / bashir o. ganiyu … [et al.]
publisher	Faculty of Architecture, Planning & Surveying
publishDate	2015
url	http://ir.uitm.edu.my/id/eprint/14655/ http://ir.uitm.edu.my/id/eprint/14655/ http://ir.uitm.edu.my/id/eprint/14655/1/AJ_BASHIR%20O.%20GANIYU%20BEJ%2015.pdf
first_indexed	2023-09-18T22:52:07Z
last_indexed	2023-09-18T22:52:07Z
_version_	1777417613257736192

A comparative analysis of the cost of cash retention and retention bond / Bashir O. Ganiyu … [et al.]

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