4/6/2016

Final account - Designing Buildings Wiki

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Last edited 03 Feb 2016

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Final account
Construction contracts generally provide some mechanism for the final payment to be made to
the contractor on completion of the works described in the contract. Generally this payment will

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be made at the end of the defects liability period providing that all patent defects have been

Contract sum.

rectified.

Contract sum analysis.

Cost consultant.

Preparing the final account is the process of calculating and agreeing any adjustments to the
contract sum (the amount originally set out in the contract to be paid to the contractor for
completion of the works) so that the amount of the final payment can be determined. The amount
of the final payment is then set out in the final certificate (or final statement). It is possible for the
final certificate to show that money is owed to the client, rather than due to the contractor.

Cost plans.
Cost value reconciliation.
Defects.
Final certificate.
Fluctuations.

Construction contracts may not specifically require the preparation of a final account, although
they generally do require the contractor to provide all documents necessary for the adjustment of
the contract sum within a specified time, and set out the time scale for and consequences of
issuing the final certificate.

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The contract sum may need to be adjusted for a number of reasons, including:

Cycling and walking plan

Variations.
Fluctuations.
Prime cost sums.
Provisional sums.
Payments to nominated sub-contractors or nominated suppliers.
Statutory fees.
Payments relating to the opening-up and testing of the works.
Loss and expense.
Liquidated and ascertained damages.
Contra claims imposed as a result of the contractor's operations (such as a third-party claim
resulting from contractor negligence or contractual breach, for example, flooding a neighbour's
property).
The release of any remaining retention.

Department for Transport's plans to turn the

UK into a 'cycling and walking nation' are

Agreeing the final account can be a complicated, time consuming and adversarial process, often

"frankly embarrassing" according to experts.

resulting in disputes. The process can be made easier if adjustments to the contract sum are
agreed as the project progresses rather than saving them up for the end. It is also beneficial if the
client's quantity surveyor and the contractor's quantity surveyor work together on drafts of the final
account before agreement it sought. It is preferable that a draft copy of the final account is signed

Unusual building design of the week

off by the contractor as an 'in full and final settlement' prior to issue.

Agreement of the final account will allow the contract administrator to issue the final certificate.
The final certificate is conclusive that all patent defects have been remedied, all adjustments to
the contract sum have been agreed and all claims settled. Latent defects may still become
apparent after completion of the contract and these may give rise to action for damages, for
breach of contract or negligence.

Where proceedings have begun in relation to a dispute, the conclusiveness of the final certificate
is subject to the findings of those proceedings.

http://www.designingbuildings.co.uk/wiki/Final_account

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In addition, the final certificate itself can be disputed (usually within 28 days). Adjudication,

'La Lavadora' - the Washing Machine building -

arbitration or other dispute resolution procedures may then be necessary to resolve the dispute.

of Santa Fe, Mexico City.

The final certificate is then only conclusive in relation to matters that are not disputed.

If the client intends to pay a different amount from that shown on the certificate, they must give

World's longest floating bridge

notice to the contractor of the amount they intend to pay and the basis for its calculation (a 'pay
less notice' - see Housing Grants, Construction and Regeneration Act for more information).

Find out more

Related articles on Designing Buildings Wiki

Contract sum.
Contract sum analysis.
Cost consultant.
Cost plans.
Cost value reconciliation.
Defects.
Final certificate.
Fluctuations.
Housing Grants, Construction and Regeneration Act.
Liquidated damages.
Loss and expense.
New Rules of Measurement.
Outturn cost.
Pre-tender estimate.
Prime cost sums.
Provisional sums.
Retention bond.
Scott schedule.
Tender pricing document
Variations.
Whole-life costs.

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