Negotiating & Agreeing the Contractors Final Account
The Final Account in construction contracts is the agreed statement of the amount of money to be paid at the end of a building contract by the Client to the Contractor(s) which brings about financial closure between the parties to the contract. The Final Account is prepared by the Quantity Surveyor often in conjunction with the contractor’s staff with the starting point being the contract sum which is then followed by adjustments in accordance with the terms of the contract. Examples of adjustments to the contract sum are as follows:
- Sums to be deducted – Prime cost sums in respect of nominated subcontractors; Provisional sums and the value of work for which approximate quantities are included in contract bills; Variations that are omissions; Monies owing to the Client from the Contractor; Any other amount that is required by the contract to be deducted from the contract sum.
- Sums to be added – The total amounts of nominated subcontracts finally adjusted in accordance with the relevant subcontract conditions; The value of work carried out against provisional sums or approximate quantities included in the contract bills; Variations that are additions; Any amounts payable by the Client to the Contractor by way of reimbursement for direct loss/and or expense; Any other amount that is required by the contract to be added to the contract sum.
Once completed and agreed by all parties it is common practice that the Final Account Statement is signed by all parties including the Client, Contractor, Project Manager and GES. The timing for finalisation of the Final Account is normally stipulated in most standard building contracts.