What is a final account in construction?
In construction, a final account is your subcontract sum adjusted for every change, claim and deduction, to show what the job is finally worth.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
It is not the company accounts your accountant prepares at the year end. It usually lists the subcontract sum, measured work, variations, claims, deductions, retention, previous certificates and payments. It then separates the gross value from the balance still to be paid. Each head should show its basis in the subcontract or an agreement, its records, its calculation and anything still unresolved. Agreeing the final figure does not, on its own, settle every other obligation. What stays open depends on your signed subcontract, the certificates, any settlement wording and the law.
Example
Illustrative example. The scenario and figures are invented.
The facts
A groundworks subcontract on a warehouse starts at £620,000, including a £40,000 drainage allowance. Then come a £74,000 foundation change, £11,000 of drainage above the allowance and an £18,000 loss and expense item. A £9,000 deduction is also proposed.
What happens
- The subcontract sum of £620,000 goes in first, with the £40,000 drainage allowance identified within it.
- The £74,000 foundation change, the £11,000 of extra drainage and the £18,000 loss and expense item are added. That gives a gross valuation of £723,000.
- The proposed £9,000 deduction is recorded separately. If applied for comparison, the adjusted figure is £714,000 before retention and previous payments.
- Each item is labelled agreed, disputed or conditional.
The account in figures
| Item | Amount |
|---|---|
| Subcontract sum, including a £40,000 drainage allowance | £620,000 |
| Foundation change | £74,000 |
| Drainage above the allowance | £11,000 |
| Loss and expense | £18,000 |
| Gross valuation | £723,000 |
| Adjusted figure after the proposed £9,000 deduction | £714,000 |
The outcome
The gross valuation is £723,000 and the adjusted comparison is £714,000. Neither figure proves that a claim or deduction is valid or that the balance is payable.
To have your final account built line by line as the job runs, see our Final Account Dispute Prevention service.