The final account is the process of agreeing the total sum due to the contractor at the end of a construction project. It is often the most contentious financial event on a project, as both parties seek to maximise their position. Understanding how the final account process works helps clients and contractors manage it effectively.
What Is a Final Account?
A construction contract typically defines a Contract Sum — the price agreed for the works at the outset. During construction, this sum is adjusted for:
The final account is the document that records all of these adjustments and arrives at the Final Contract Sum — the total amount payable to the contractor.
Who Prepares the Final Account?
Under JCT contracts, the contractor is typically required to submit a final account statement within a defined period after practical completion (often 3–6 months). The contract administrator (usually the architect or project manager) then has a period to ascertain and certify the Final Contract Sum.
In practice, the quantity surveyor plays a central role in:
Common Final Account Disputes
Variations: The most common area of dispute. Contractors often submit variations significantly higher than the employer's quantity surveyor assesses them. Common areas of disagreement include the scope of the variation, the applicable contract rate, and whether an item is a variation at all (or part of the original scope).
Loss and expense: Loss and expense claims arise where the contractor has incurred additional costs due to employer-risk events (e.g., late information, variations causing disruption, access issues). These claims require careful analysis of cause, effect, and quantum.
Delay and liquidated damages: Where the contractor fails to complete on time, the employer may deduct liquidated damages (LDs). The contractor may resist this by claiming extension of time for employer-risk delays. Establishing who caused what delay is often complex.
Defects: Where the employer makes deductions for defects the contractor has not rectified, the contractor may dispute the quantum or their liability for the defect.
How to Manage the Final Account Process
Keep records throughout the project. Good record-keeping is essential. This means:
Deal with variations promptly. Variations are best agreed close to when they are carried out. The longer they are left, the harder it is to establish the scope and cost of the work.
Respond to loss and expense claims properly. Don't simply reject claims without analysis. If a claim has merit (even partially), agree the meritorious elements early and focus the dispute on what remains.
Use the contract mechanisms. JCT and NEC both contain detailed provisions for agreeing the final account. Follow the contractual process — failure to serve correct notices or respond within contractual timescales can have significant consequences.
Instruct a quantity surveyor. Final account negotiation is a specialist task. A quantity surveyor with experience of final account work can protect the client's position, identify legitimate claims versus opportunistic ones, and achieve fair settlements.
How Volarex Approaches Final Accounts
We take a commercial and pragmatic approach to final account work. Our goal is to achieve a fair settlement — one that pays the contractor what it is genuinely entitled to and protects the client from inflated or unsupported claims. We review all variations, assess loss and expense claims on their merits, and negotiate the settlement directly with the contractor's QS.
Where agreement cannot be reached, we provide the expert quantum analysis needed to support adjudication or other dispute resolution proceedings.