A. A public construction contract shall provide for partial payment based upon work completed. The contract shall provide that up to five percent (5%) of all partial payments made shall be withheld as retainage. At any time the contractor has completed in excess of fifty percent (50%) of the total contract amount, the retainage shall be reduced to two and one-half percent (2.5%) of the amount earned to date once the owner or owner's duly authorized representative has determined that satisfactory progress is being made.

B. A subcontract shall include a provision for the retainage of a portion of payment due. Such retainage shall not exceed five percent (5%) of the amount of the payment due. When the work of the subcontractor has been determined by the holder to be at least fifty percent (50%) complete, the retainage shall be reduced to two and one-half percent (2.5%) of the original contract amount.

C. No later than twenty-one (21) calendar days after a certificate of substantial completion is issued for the project or separate usable phase of the project and upon adequate performance of the prime contractor and with approval of any applicable surety, retainage shall be released by the owner to the prime contractor less an amount no greater than one hundred fifty percent (150%) of the estimated costs to correct any incomplete or defective work as identified, itemized, and attached to the certificate of substantial completion. All remaining funds shall be released as each deficiency is satisfactorily completed. The prime contractor shall release within ten (10) calendar days of receipt the share of those funds that have been withheld from other entities. All other entities shall release within seven (7) calendar days of receipt the share of those funds that have been withheld from other entities.