The final account is the arithmetic of the whole build, written down once at the end. It takes the contract sum, applies every adjustment the contract provides for, and arrives at the number that was actually payable for the actual building.
On a well-run project it takes an afternoon, because every component was agreed when it happened. On a badly run one it takes months, because it is not an arithmetic exercise at all. It is a reconstruction of a year of conversations, conducted by two parties with opposite interests, about events neither can now evidence.
What it contains
| Component | Direction | | --- | --- | | Contract sum | The starting figure | | Variations, valued | Usually up | | Provisional sums: allowance out, measured work in | Either way | | Prime cost sums: allowance out, actual item in | Usually up | | Remeasurement of approximate quantities | Either way | | Fluctuations, where the contract provides for them | Usually up | | Loss and expense claims | Up | | Liquidated damages for late completion | Down | | Less: amounts previously certified and paid | Down | | Final balance due | |
Why it becomes a fight
Almost always for one reason: the components were never agreed as they arose.
A variation instructed in March and priced in November is priced in a context where both sides know the total. The contractor knows they are behind. The employer knows they are over budget. Neither is now valuing the work. They are negotiating a position.
A variation priced in March, when the only question on the table was what that particular change was worth, is priced honestly by both sides, because neither of them yet has anything to defend.
This is the entire argument for keeping the adjusted contract sum current. Not because a running total is tidy, but because it converts the final account from a negotiation into an addition.
What to have ready
- Every variation order, with its agreed value and its date.
- The record of every provisional and prime cost sum: what was allowed, what it became, and the instruction behind it.
- All interim certificates and the valuations behind them.
- The retention account: accrued, released at practical completion, balance outstanding.
- Dates: possession, any extensions of time granted, practical completion, the defects period and the making good certificate.
- Correspondence that agreed anything, filed with what it varied rather than by date.
If that list can be produced from existing records, the final account is a spreadsheet. If it has to be assembled from memory and a WhatsApp thread, it is a dispute.
What goes wrong
Extensions of time were never formally granted or refused. Time is half the final account, because it drives both liquidated damages in one direction and prolongation costs in the other. A build where nobody ever decided, in writing, whether a delay was excusable has left the largest single line item undetermined.
The retention account is reconstructed. It should be a running line all along.
Verbal agreements. The phrase "we agreed on site" appears in every difficult final account and settles none of them.
It is started too late. The final account is easiest to prepare while the people who did the work are still reachable. Six months after handover the site team has dispersed, and the document becomes archaeology.