Final Account Preparation for Construction

As the name suggests, final accounts in construction outline the financial summary of the project. The process should be methodical so that all associated costs are clearly detailed. 

At Anderton Gables, we take care of the final account preparation for you. We liaise with your contractor’s Quantity Surveyor to produce an accurate and agreed-upon account.

Keep scrolling to find out more about what’s involved in the preparation of final accounts for construction projects. 

Got questions? Please get in touch with our team to receive tailored advice on anything we’re about to get into. 

Tom Hargreaves
Director

Catherine Newton
Director

What is Final Accounts Preparation for Construction Contracts?

Quantity Surveyors prepare final accounts by calculating and adjusting the original contract sum as needed. 

How the process works:

  • The contract sum is the amount initially set out in the contract to be paid by the contractor

  • The final account is the agreed amount to be paid at the end of the contract by the employer to the contractor

  • The final account is the final payment to be made between the client and the contractor

The final account stage is a significant milestone in a construction project and it should be fairly straightforward. But between fluctuations, delays and missing documentation - final accounts can be a little time-consuming. 

For example, changes often need to be made to the contract sum due to statutory fees, provisional sums, liquidated damages, etc. That’s why we assess all the financial aspects involved when preparing the final account negotiations. 

Construction contracts don’t always require the formal preparation of a final account. However, your contractor will need to provide all necessary documentation so you can adjust the contract sum and set out a time scale for issuing the final certificate.

How to prepare Final Accounts for Construction

Collect Contractor’s Documentation

The ways in which we prepare a final account are dependent on the project and the original contract sum. The contractor must provide the Quantity Surveyor with all the documents needed for final account preparation within six months of practical completion. The Quantity Surveyor must prepare and send the final account document within three months of receiving these documents.

Assess Original Billed Rates

Most of the final accounts will include the original billed rates. These rates can be changed if the contractor’s quality surveyor has a good reason to question their accuracy. In this case, the surveyor can make a request for the work to be measured on-site. 

Any adjustments must be made in regard to the matters listed on the standard form of contract and conditions. These changes can result in sums either being deducted or added. 

Examples of Sums To Be Deducted

  • Provisional sums and the value of work for which approximate quantities are included in contract bills

  • Variations that are omissions 

  • Fluctuations

  • Any other amount that’s required by the contract to be deducted from the contract sum

  • Prime cost sums and amounts relating to named subcontracts and associated contractor’s profit

Examples of Sums To Be Added

  • Total amounts of nominated subcontracts adjusted in accordance with the relevant subcontract conditions

  • If the contractor was tendered for work that was initially planned for a subcontractor and they take it on instead, the tender needs to be adjusted

  • Amounts due to nominated suppliers, such as cash discounts of 5 per cent (excluding VAT)

  • Contractor’s profits 

  • Amounts payable by the employer include statutory fees, charges, royalties, patent rights and insurance

  • Value of work carried against provisional sums or approximate quantities included in the contract bills

  • Reimbursement for direct loss or expense from matters affecting the progress of the construction project

  • Amounts used up by the contractor due to fire or other damage, which is insured by the employer and the contractor is entitled to reimbursement

  • Any amount payable to the contractor under the fluctuations clauses

  • Any amount required by the contract to be added to the contract sum

The Finishing Touches

All items must be displayed separately in the final account with the amounts due to each nominated subcontractor and supplier listed. 

Any delays in the preparation and settlement of the final account equate to additional costs for the contractor. 

Therefore, the architect and quantity surveyor have a contractual responsibility to meet the contracted deadline for the completion of the final account. The contractor should help them meet this date with the prompt provision of subcontractors and suppliers, agreement of measurement and prices and the supply of all necessary documentation.

The full and final settlement will be presented professionally and accurately.

Who prepares a Final Account Statement?

The private Quantity Surveyor is usually responsible for the preparation of final accounts. 

However, it’s best for the client and contractor’s quantity surveyors to work together to produce an agreed final account. The contractor’s Quantity Surveyor should be given the opportunity to be present as measurements are recorded.

What is a Final Certificate?

The final certificate is issued when the construction contract has been completed, and it’s the end of the defects liability period. 

The certification signals the release of all remaining funds due to the contractor, including any remaining retention. The value of the final certificate is based on the final account agreed by both the contractor and the cost consultant. 

Once the final account statement is released, all patent defects, claims and adjustments must have been settled.

If there have been proceedings relating to a dispute, the final certificate is also subject to such findings. Equally, the final certification can be disputed within 28 days - and hopefully, resolved by adjudication, arbitration or other necessary proceedings. The certificate is only conclusive to matters not disputed. 

In some cases, the client may intend to pay a different amount than that shown on the certificate. They must give a good reason for the new amount and plenty of notice to the contractor of the amount they intend to pay.

Talk to us about your Construction Project requirements

Are you interested in finding out more about anything we’ve mentioned above? 

Anderton Gables is a leading team of built environment specialists with offices in Liverpool, Manchester and Preston. 

To discuss your project requirements please get in touch with us. 

Alternatively, give us a call on 0161 696 3119 to speak with our team.