FAQs for Final Accounts

Question 1

Why do final accounts settle so low?

Accepted Answer

Because by settlement the leverage has moved: the work is done, the records are thin, and waiting costs you more than it costs them. The fixes all happen earlier. Accounts settle low for reasons that are mostly structural rather than moral. By the time the account is tabled the work is finished, so the payer holds the money and the payee holds only paper; every month of delay costs the subcontractor financing and costs the payer nothing, which is exactly what a low offer prices. Into that imbalance go the technical discounts: variations notified late or not at all, so each carries a time bar argument; records that prove the work happened but not what it cost, inviting a global claim, a lump sum claim that cannot tie causes to amounts and gets discounted accordingly; contra charges saved up all job and dumped into the assessment at the end; and retention quietly ageing past its release triggers. Each weakness is worth a percentage to the assessor, and the percentages compound. What moves the number is rarely a better argument at the settlement meeting: it is the file built while the job ran, notices in time, variations priced as they happened, records that put costs against causes, because an account the payer knows would survive adjudication gets a different offer from one it knows would not.

Question 2

How do I dispute a contra charge?

Accepted Answer

Check the machinery first: a contra charge deducted from a cycle without a valid Pay Less Notice fails on process alone. Then make them prove it. Take it in three passes. First, process: a contra charge, a backcharge for something like damage, attendance or supervision the payer says you caused, is still a deduction, so if it was knocked off a Notified Sum without a valid Pay Less Notice served in time, it fails on the machinery alone and the shortfall is recoverable whatever its merits. Second, entitlement: find the clause relied on, check any conditions it carries, notice of the cost before it was incurred being a common one, and ask whether the charge is a genuine loss or a tariff; charges invented at final account for events nobody documented at the time have a short life under scrutiny. Third, quantum: demand the substantiation, the invoices, timesheets and allocation behind the number, because contra charges are routinely round numbers that dissolve when itemised, and check for double counting against work you were never paid for. Put the challenge in writing while the events are fresh, and if the charge stands unpaid after that, adjudication decides it quickly; assessors know that, and a documented challenge often ends with the charge quietly dropped at settlement.

Question 3

Is adjudication worth it for small disputes?

Accepted Answer

Sometimes. The stronger and simpler your notice position, the smaller the dispute adjudication can economically carry; weak, sprawling disputes need to be bigger. The honest frame is that in adjudication each side normally carries its own costs win or lose, with the adjudicator's fee usually following the result, so the question is whether what you would recover clears what the process costs you in fees and in your own time. That is why the answer turns on shape as much as size. A pure notice dispute, a Notified Sum unpaid with no Pay Less Notice, is narrow, documentary and quick, so the economics work far further down the scale; a messy valuation fight over dozens of variations needs enough at stake to fund the argument. Three other levers matter. A decision is enforceable and payers know it, so a genuinely strong position often gets paid once the referral lands, without a decision ever being written. Some contracts and industry schemes offer capped fee processes designed for low value disputes, worth checking before assuming the full cost. And the alternative is not all or nothing: a well evidenced threat, interest running and the relationship priced in settles plenty of small accounts without anyone being appointed. What rarely makes sense is adjudicating a small, weak, sprawling claim: the process rewards clean positions at every size.

Question 4

What is a final account?

Accepted Answer

The last valuation of the job: the agreed price reworked for every change, claim and deduction into one closing figure. The final account is the contract sum, the price you originally agreed, adjusted for everything the job actually became: variations (changes to the work that was priced), provisional sums (allowances put in the contract for work that could not be priced exactly at the start), claims (extra money for delay and disruption caused by the other side) and set-offs (amounts the payer holds back for its own counter-claims). Almost no project finishes at its tender figure, so the final account reconciles the original price and the built reality into one closing number that ends the money side of the contract. It is less a single document than an argument set out like a ledger: every head, measured work, changes, loss and expense, retention, has its own basis in the contract and needs its own evidence, so the account is only as strong as its weakest supported line. Whoever prepares it should be able to point, for every figure, to the clause that entitles them to it and the records that prove it.

Question 5

When should the final account be submitted?

Accepted Answer

Follow the contract's timetable, but in practice submit as soon as the records are ready, because delay usually only helps the other side. By the contract's timetable where it sets one, and in practice as early as your records allow, because delay usually only helps the other side. Many standard contracts set a timetable for the final account after practical completion (the point when the works are finished enough to be handed over and used): the JCT forms give the contractor a period to submit its account and the other side a period to assess it, while NEC4 runs the same reckoning through a final assessment the Project Manager must make by a set deadline. Some contracts make that timetable bite by letting an assessment become conclusive, meaning fixed and no longer open to challenge, if you do not respond in time. But the practical clock is harsher: every month after completion, people leave the project, records get scattered across archives and inboxes, and memories fade, so your ability to prove each figure quietly shrinks. So submit as soon as the account is properly evidenced, while everyone who can verify it is still reachable, and do not treat the contract's outer deadline as the target.

Question 6

What if the contract says nothing about final accounts?

Accepted Answer

You still have one: the ordinary payment rules and the Construction Act carry the account even when the contract is silent. You still have one, because the ordinary payment rules, the Construction Act and the contract's own valuation clauses do the work instead. A final account is not a special legal creature: it is simply the last valuation of the works, so on any construction contract the everyday payment machinery carries it. That machinery, from the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act), works like this: you make an application for the closing balance you say is due, the payer must issue a Payment Notice saying what it will pay, and if it wants to pay less it must serve a Pay Less Notice by a deadline; if it serves neither, the amount you applied for generally becomes the sum that legally must be paid. Behind all that sits adjudication, the fast 28 day dispute process every construction contract must offer, which lets an independent adjudicator decide the figure if the assessment is wrong. What you lose when the contract is silent on final accounts is the timetable, not the rights, so set the timetable yourself: submit the account formally, demand a response by a clearly stated date, and if it does not come, escalate on the record through the payment machinery or adjudication rather than letting it drift.

Question 7

What is a conclusive evidence clause?

Accepted Answer

A clause that locks in a final certificate or assessment once a short deadline passes, unless you start a dispute in time. It is a clause that makes a final certificate or final assessment binding, meaning it can no longer be challenged, unless you formally start a dispute within a set period. A final certificate is the document the contract administrator or architect issues at the very end to state the last agreed figures for the job; a conclusive evidence clause then treats it as proof of those figures. These clauses deliberately end arguments by deadline rather than by who is right: once the period passes, the certificate's numbers, and under some contracts its statements about the quality of the work, become fixed however wrong they may be, so a genuine underpayment can simply stop being recoverable. The trap is that the period is often only weeks, and it keeps running while settlement talks still feel friendly, so people miss it without realising. So when a final certificate arrives the first two questions are what exactly it makes conclusive and the precise date that takes effect, and the diary entry to protect the deadline usually matters more than the reply letter you send.

Question 8

Can they set off contra-charges against my final account?

Accepted Answer

Yes, but only if the charge has a real basis, proof it was caused by you, and a Pay Less Notice served in time. Only within the contract's set-off rules and the notice rules of the Construction Act, and charges invented late often fail both tests. Set-off means the payer deducting its own counter-claims from what it otherwise owes you, and contra-charges are the specific costs it says you caused, for example putting right defects or the cost of finishing late. A set-off is a claim like any other: it needs a proper basis in the contract or in law, records that show the cost was incurred and genuinely caused by you, and, crucially, where it reduces a payment that would otherwise be due, a Pay Less Notice (the formal notice under the Construction Act 1996 that a payer must serve by a deadline to justify paying less than the applied amount) served in time. Miss that notice and the deduction usually cannot be made for that payment cycle, whatever its underlying merit. Schedules of contra-charges that appear for the first time at the final account, having never been raised while the job was running, tend to be negotiating documents rather than proven costs, so take them apart charge by charge, testing the basis, the causation and the notice for each, rather than haggling over the headline total.

Question 9

When must my retention be released?

Accepted Answer

When the contract's release events happen, usually half at practical completion and the rest after defects are made good, not when the payer chooses. On the contract's own triggers, which are usually half at practical completion and the balance after the defects have been made good, not whenever the payer happens to feel ready. Retention is the slice of each payment, often around three to five per cent, that the payer holds back during the job as security and releases later; it is your money, kept back on conditions rather than earned by the payer. Practical completion is the point at which the works are treated as finished and handed over, and making good means putting right the defects that show up in the agreed period afterwards. Each release event turns a slice of the retention into a sum that is due, and once due the ordinary payment machinery attaches to it: you apply for it, and if the payer refuses without serving the notice the Construction Act requires, that refusal can be tested through the payment machinery or adjudication instead of sitting on file as an ignored letter. Excuses that tie your release to the payer's own position further up the chain, for example that it has not yet been paid by someone above it, deserve particular scrutiny: pay-when-paid arrangements (clauses that make paying you conditional on the payer first being paid by someone else) are, with only narrow exceptions such as upstream insolvency, ineffective under the Construction Act.

Question 10

Why do global claims keep failing?

Accepted Answer

Because a claim that blames every cause at once proves none of them, so a single fault of your own can sink the whole number. Because blaming everything at once tends to prove nothing in particular, so a single cause the claimant is responsible for can sink the whole number. A global claim (sometimes called a total cost claim) says the job cost more than was allowed for and puts the whole difference down to the other side's events lumped together, without linking any one cause to any one pound of the extra cost. That structure hands the defence its answer on a plate: some of the overrun was almost certainly the claimant's own tender error, inefficiency or subcontractors, and because the claim cannot separate those causes from the rest, a court or adjudicator can conclude that none of the sum is properly proved. Global claims can succeed, but they carry a heavy risk and usually only survive in narrow circumstances. The reliable cure is to break the claim down, event by event, each with its own established effect and quantified cost, and to concede honestly the parts that are genuinely yours, because a smaller claim that is fully proved is worth far more than a large one that collapses on its weakest link.

Question 11

Do I have to accept their final account assessment?

Accepted Answer

No: an assessment is one side's opinion, and unless a conclusivity provision has hardened it, it can be challenged. No. Their assessment is just one side's opinion of what the account is worth, and unless a conclusive evidence clause (a term that makes a certificate or assessment binding once a deadline passes) has already hardened it into something fixed, you are free to challenge it. Respond in a set order. First check the machinery: work out whether any final certificate or deadline is about to make the assessment conclusive, because that decides how much time you have. Then demand the reasoning line by line, because a figure valued at nil with no build-up is usually far weaker than it looks and often cannot be defended when tested. Then concentrate your challenge on the heads that carry the real money rather than fighting every line at once, which wastes effort on figures that will not move the outcome. Adjudication, the fast 28 day process an independent adjudicator uses to decide construction disputes, is available at any time, so if talks stall, referring just the single largest disputed head is often what breaks the deadlock and repositions the whole negotiation.

Question 12

Can a final account dispute go to adjudication?

Accepted Answer

Yes: on a construction contract covered by the Act, a dispute can be referred at any time, often better aimed at one head of the account than the whole of it. Yes. On a construction contract covered by the Construction Act 1996, either side can refer a dispute to adjudication (the fast 28 day process in which an independent adjudicator decides the dispute and the decision binds the parties unless and until a court or arbitrator later overturns it) at any time, and that includes a dispute about the final account. The right does not expire when the job ends, so a final account dispute is just as referable as an interim payment dispute during the works. The real question is not whether you can, but how wide to make it. A referral of the whole account asks a great deal of a 28 day timetable, because the adjudicator has to grasp and decide every disputed head within a few weeks. A referral confined to the largest or cleanest single head, one family of variations, one schedule of set-offs, one retention balance, is far easier to decide well, and a clear decision there tends to reset the value of everything still in dispute and push the rest towards settlement. So usually pick your strongest head and refer that, rather than throwing the entire account at the process.

Question 13

Should I sign a full and final settlement agreement?

Accepted Answer

Only after you have read the scope, the carve outs and the arithmetic, because a signed settlement usually ends every claim it covers for good. Only once you know exactly what it covers, because a properly drafted settlement usually ends every claim inside its scope for good, including your right to take those claims to adjudication or court later. A full and final settlement agreement draws a line under the dispute: in exchange for an agreed figure you give up the claims it releases, permanently. Before signing, check three things. First, the scope: does it settle just this final account, or all claims arising from the project, including ones you do not even know about yet? The wider the wording, the more you are giving away. Second, the carve outs, the things you deliberately keep alive: retention still to be released, any outstanding VAT, interest, and liability for latent defects (defects that only surface later) should each be dealt with expressly, not left to silence, because anything the release covers is gone. Third, the arithmetic: work out the settlement against your own reconciled account, the figure you can actually prove, not the other side's assessment, so you know the true size of what you are conceding. Taking a discount in return for certainty and cash now is often a sensible deal; signing one under time pressure without reading the release clause is how good deals quietly turn into bad ones.

FAQs for Final Accounts, Claims & Disputes

Frequently asked questions

How final accounts work