Trade items, never percentages
Negotiate your final account item by item, because splitting the difference rewards whoever inflated their figure most. Trade weak items away for strong ones paid in full, and record what each concession bought as you go.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
Splitting the difference treats a fully evidenced £50,000 variation and a £50,000 guess as equal, and whoever guessed knows it. It is common because it feels fair and finishes quickly. But it rewards inflation and punishes honesty on every future account: the other side learns to claim high because it will be met halfway. Trading item by item keeps the strong items whole and gets something back for the weak ones. It also leaves a record of why each figure moved. That matters when a finance director or auditor later questions the settlement.
How to do it
- Rank every disputed item as strong, arguable or weak on the evidence before the meeting, with its value.
- Refuse any proposal framed as a percentage of the total, and ask instead which items they dispute and why.
- Concede weak items only in exchange for strong items being agreed in full, and say so when you do.
- Keep a running note of each item, the figure agreed and what it was traded against.
- Send round the item schedule with the agreed figures the same day, so the trades cannot be unpicked.
Example
Illustrative example. The scenario and figures are invented.
The facts
A main contractor offers a subcontractor 60 per cent of the £200,000 disputed on its final account. The subcontractor's surveyor has ranked the 30 disputed items: 12 strong worth £110,000, 10 arguable worth £60,000 and 8 weak worth £30,000.
What happens
- The surveyor declines the percentage and puts forward the item schedule with the evidence for the strong items.
- The 12 strong items are agreed in full at £110,000, the subcontractor conceding 6 of the weak items in return.
- The arguable items are argued one by one and settle at £38,000. The remaining 2 weak items settle at £5,000.
Settlement by item group
| Group | Agreed |
|---|---|
| Strong items | £110,000 |
| Arguable items | £38,000 |
| Weak items | £5,000 |
| Total | £153,000 |
The outcome
The account closes at £153,000, against the £120,000 the percentage would have produced. The schedule records what each concession bought, and the subcontractor's finance lead signs it off without a query.
To have this done for you, see our Final Account Claim service.