Professional Documents
Culture Documents
The final account is prepared at the completion of the construction phase of a project. As the name
implies, the final account is a document that brings together all the financial aspects of a project into one
single document. Its purpose is to allow both the employer and the contractor to value the complete
project.
Timing
The contract states when the final account should be prepared. Often, if the project's financial report has
been prepared in a similar format, it is possible to use that document as the basis of the final account
itself. The Joint Contracts Tribunal contract JCT 05 Private Without Quantities, clause 4.5.1, states that
not later than six months after practical completion, the contractor shall provide the quantity surveyor
with all the documents needed for the adjustment of the contract sum.
Remeasures
Under 'traditional' contracts based upon bills of quantities (BQs), it is necessary to remeasure the works
for the final account. However, if the BQs have been measured from accurate drawings produced at the
tender stage, it is not necessary to remeasure the whole project. Elements that have been subject to
change or design development will need to be remeasured on site or, alternatively, from as-built
drawings. Sub-structure and drainage sections are nearly always remeasured, due to the uncertainty of
ground conditions, depths, and so on.
Once the remeasured value has been ascertained, the original BQ allowance should be omitted from
the final account.
While undertaking the remeasuring of works, the project surveyor is advised to identify all the items or
quantities included in the BQ that are described as 'APPROXIMATE' or 'PROVISIONAL'. Such items
and quantities should be remeasured, or omitted from the final account, as appropriate. Items of this
nature are often included in BQs as allowance for possible works that are not detailed on the tender
drawings but which the surveyor, for example, deems will form an integral part of the completed works.
Architect's instructions
During the course of the works, architect's instructions (AIs) will be issued. These record changes to the
tender drawings. They may simply detail a small item, or alternatively, may comprise a drawing issue
which may, on occasion, change a complete element.
When the AI concerns a prime cost (PC) sum, provisional sum or provisional item, the item is first
entered in the AI section of the final account, with a cross-reference to the appropriate section. Cost
values are not included against the AI section, but in the section concerned.
Upon receipt of the instruction, an approximate value should be established and entered at the bottom
of the sheet. The approximate value of the AI will be established by measuring approximate quantities to
establish an estimated value. The value should be entered onto the Financial Report AI Summary Sheet
for Financial Report Purposes.
As the contract progresses, the instruction or variation should be measured and priced accurately, as
soon as possible after receipt. Ideally, this should be no later than immediately after the work is actually
executed on site. The value will be agreed with the contractor's quantity surveyor or the private quantity
surveyor (PQS) and entered on the sheet as 'AGREED'.
Additions
Claims
Formal claims are less prevalent than previously in the construction industry. This is a direct result both
of the Egan Report - Rethinking Construction- and the ethos of partnering.
If a claim is to arise, or seems a possibility, allowance for the cost associated with it must be included in
the cost report. Allowance should be made for a significant potential claim only after discussion with the
architect in order to ascertain its appropriateness and effect upon the contract.
The word 'claim' elicits a very emotional response in construction. Often, people become defensive with
regard to their position on claims, sometimes to the detriment of the project as a whole. For this
purpose, claims should be approached and dealt with as a team, with the involvement of the architect,
engineer and employer, and not made solely the responsibility of the quantity surveyor. The quantity
surveyor, however, will value the claims upon agreement of the issues involved.
It is advisable to consider claims as a separate issue for final account statement purposes.
Dayworks
Dayworks are used to value and agree works (such as architect's instructions - AIs - and so on), which
cannot be valued by other means. Dayworks are, in effect, a timesheet signed by the clerk of works or
the architect to verify that the items stated are the actual hours worked or the materials and plant
utilised.
The RICS Definition of Prime Cost of Daywork Carried Out Under a Building Contractis used for
establishing the appropriate rate. This is usually subject to an adjustment, a percentage addition to the
daywork sheet. The percentage adjustment includes an element of profit and overheads on the prime
cost (dayworks).
For final account purposes, a schedule of dayworks will be maintained and referenced against the
relevant AI.
Fluctuations
Generally, construction contracts are now fixed-priced for the duration of the contract, with the contractor
allowing for price increases in labour or materials or plant (and so on) in his or her tender. The risk for
such increases lies with the contractor.
On larger construction projects, that will take a number of years to complete, fluctuations may apply.
Indices such as the DTI Price Adjustment Formula indices (previously the NEDO indices) are used to
agree price increases due to inflation.