Final Accounts

Final Payment
What is a final payment?
When is a final certificate issued?
What is contained in the final certificate?
What are the implications of issuing a final certificate?
Final Payment
The last payment from the owner to the contractor of the entire unpaid
balance of the contract sum as adjusted by any approved change orders

This leads to the issuance of a final certificate

JCT Forms include clauses which make conclusive the Final Certificate in
relation to the fulfilment of specified obligations under the Contract.
Final certificate
All interim certificates are “Payments on account” meaning that the
true value of the work could go up or down.
The final certificate should indicate the true value of the completed
work
Should (under JCT) be issued within 2 months of the end of the
Rectification Period (clause 4.26) or Certification of Making Good,
whichever occurs last.
Will contain everything that should be paid to the contractor.
FIDIC 1999 Red book
Statement at Completion – Cl. 14.10
Apply within 84 days after receiving TOC. Engineer shall certify
according to Cl 14.6 (as an Interim PC)
Application for Final Payment Certificate – Cl. 14.11
Apply within 56 days after receiving Performance Certificate. This is a
draft final statement
If there are no disputes, Contractor submits “ Final Statement”
If there are disputes, Engineer to issue an IPC for the agreed amount.
After the dispute has been resolved Contractor submits the “ Final
Statement”
FIDIC 1999 Red book
FIDIC 2017 Red book
Statement at Completion – Cl. 14.10
Apply within 84 days after receiving TOC. Engineer shall certify
according to Cl 14.6 (as an Interim PC)
Application for Final Payment Certificate – Cl. 14.11
Apply within 56 days after receiving Performance Certificate. This is a
draft final statement (Cl 14.11.1)
If there are no disputes, Contractor submits “ Agreed Final Statement”
If there are disputes, Engineer to issue an IPC for the agreed amount
“Partially Agreed Final Statement”.
After the dispute has been resolved Contractor submits the “ Final
Statement”
General Payment Schedule (FIDIC 2017 Red book)
Effect of Final Payment Certificate
Provides conclusive evidence that
◦ Adjustments to the contract sum have been made
◦ All EOT’s have been granted
◦ All Claims have been allowed for
◦ All work has been carried out to the Engineer’s satisfaction
What is a final account?
JCT 2016

Clause 4.25 – 4.26

If this is a “lump sum fixed price” contract
◦ It means the contract sum is the price unless subject to agreed adjustments
as detailed in the above clauses
◦ Some items in the bill are likely to be “provisional” meaning they will be
adjusted
◦ “Approximate” quantities will be adjusted
Who prepares the Final account?
JCT 2016 Clause 4.25
◦ Contractor shall provide all documents necessary for the
adjustment of the contract sum within 6 months of issue of
the PC certificate
◦ Three months after that the A / CA or QS will then ascertain
amount of loss and expense and prepare a statement of all
adjustments to be made to the Contract Sum (i.e. the Final
Account)
◦ The Final Certificate shall be issued as per clause 4.26
.
Preparation of the Final account
Golden Rule

Never measure or bill a final account item

without firstly having measured any
associated omission(s)
Final account summary
Item Omissions Additions Sub-Total Total
Contract Sum 1,000,000.00
Omit
Provisional Sums 30,000.00
Contingencies 20,000.00
Dayworks 5,000.00 (55,000.00)

Add
Variations a/c 20,000.00 60,000.00
NSC accounts 100,000.00 95,000.00
Loss and expense 10,000.00
Dayworks 5,000.00 50,000.00 (5,000.00)
TOTAL 995,000.00
Layout
Most contract forms include some/all of the following
Cover Sheet (i.e. Contract name, Employer /
Contractor’s details etc.)
General Summary sheet
◦ Contract sum, omissions and additions for each
section, omission of contingencies items and
possibly amounts stated as due in previous Interim
certificates
Prime Cost Sums – deduct (inc. Contractor’s profit)
Provisional Sums – to be deducted
Continued
Value of approximate quantities when used
Measured Variation Account – (add or deduct) - all
types
Schedule 2 quotations where A has issued a
confirmed acceptance
Dayworks
Loss and/or expense
Fluctuations – (add or deduct) (if applicable)
N.B. all pages separately mathematically checked
after typing
Documentation required
To substantiate omissions/additions
Original tender documents (BQ, Spec, Drawings)
Variation orders (= Architect’s Instructions)
Minutes of site meetings (must be signed/confirmed)
Correspondence (to all parties)
Daywork sheets (record of materials; labour and plant
resources)
Final invoices from Nominated Subcontractors / Nominated
Suppliers
Fluctuation calculations (if applicable)
Agreed loss and/or expense docs (inc amounts)
But also consider
Checking final payments have been received by Nominated Sub
contractors and Nominated Suppliers (if applicable)
Contingency item (must be deducted on summary sheet)
Advising Employer re: Liquidated and Ascertained Damages (LADs) (if
applicable – clause 2.32.1)
Compliance with Housing Grants, Construction and Regeneration Act
1996 (clauses 4.15.3 – 7)
N.B. Final date for payment shall be 28 days from date of issue of Final
certificate (NB it is 14 days for an Interim certificate)
Any Employer/Contractor “commercial’ settlements” – these should be
recorded in a separate agreement
Drafting the final account as work proceeds
Read the contract : is the Final certificate considered as conclusive
evidence?