Introduction — Completion & Final Account

Section 1

Purpose

Note on JCT editions: JCT has published the 2024 Edition. This guidance cites JCT SBC/Q 2016 clause references; the commercial and payment mechanisms are substantively unchanged in the 2024 edition, but specific clause references should be verified against the contract edition in use on any given project.

Stage 6 — Completion & Final Account — covers the period from Practical Completion (PC) through to the issue of the Final Certificate and the formal close-out of all financial matters. The QS role at this stage shifts from active cost management to structured financial settlement: agreeing all outstanding variations and claims, certifying the making-good of defects, issuing the Final Valuation, and reconciling the final outturn against the original approved budget.

This guidance note provides an overview of the stage for RICS-regulated QS firms practising in England & Wales. It sets out the financial, contractual, and professional obligations that arise between PC and the issue of the Final Certificate, with cross-references to the detailed topic-specific notes (GN-FA-01 to GN-FA-10) that follow. It is grounded in the RICS Black Book suite and relevant JCT/NEC contractual provisions.

Stage 6 is one of the most commercially important periods of the project lifecycle. Errors of omission or delay in the Final Account process can expose clients to conclusive certificate risk, loss of retention, or unenforced LAD deductions. RICS members have a professional duty to manage this stage rigorously and to advise clients of critical contractual deadlines.

A distinct but critically important scenario that can arise at or during Stage 6 is contractor insolvency. When a contractor becomes insolvent — whether through liquidation, administration, company voluntary arrangement (CVA), or administrative receivership — the standard Final Account process under the contract is replaced by a separate insolvency payment regime. The QS must be able to prepare a Notional Final Account (see section 5 below), liaise with the insolvency practitioner, and protect the employer's financial position during what can be a complex and high-risk stage of project close-out. RICS Termination of Contract, Corporate Recovery and Insolvency (GN 104/2013) and RICS Final Account Procedures (s.4.16) are the primary professional references.

Section 2

Key Principles

Practical Completion triggers simultaneous financial events: first moiety of retention released, LADs cease to accrue, Defects Liability Period (DLP) commences — per RICS Defining Completion of Construction Works (1st ed., August 2024).
The DLP (typically 12 months under JCT SBC/Q 2016 Clause 2.38) is the contractor's right and obligation to rectify notified defects; the employer may not appoint others without following the contract procedure.
Under JCT SBC/Q 2016 Clause 4.15, the Final Certificate is conclusive evidence of the sum due unless challenged by adjudication, arbitration or litigation within 28 days of issue — a critical client-risk deadline.
The RICS Final Account Procedures (1st ed., effective 14 March 2016, reissued October 2024) establishes the structured process for settling the Final Account: submission, checking, queries, negotiation, agreement, and final statement.
RICS Cost Analysis and Benchmarking (2nd ed., August 2024) requires elemental cost data to be prepared in BCIS/SFCA format and submitted for benchmarking — a professional obligation, not optional.
RICS Retention (GN 90/2012) confirms that retention monies should be held on trust; the QS must ensure prompt release of both moieties at the contractual trigger dates.
Contractor insolvency — Notional Final Account: where the contractor becomes insolvent during or before Final Account, the standard payment regime ceases and is replaced by the insolvency settlement mechanism. The QS is required to prepare two documents: (1) a Notional Final Account (prepared as soon as insolvency is confirmed — showing what the contractor would have been entitled to receive had it completed the works, i.e. the 'A' figure in the JCT post-termination account formula); and (2) a Completion Final Account (prepared after a replacement contractor finishes the works, incorporating all additional completion costs). Per RICS Termination of Contract, Corporate Recovery and Insolvency (GN 104/2013), Section 4.2.1.1, the Notional Final Account 'assesses the party's liability to the insolvent company and shows the implications on the contract'; it may be higher than the anticipated Final Account because it recognises costs incurred at the date of insolvency. The Corporate Insolvency and Governance Act 2020 (CIGA 2020) also affects some termination rights and should be reviewed with the client's solicitors in any insolvency event.

Section 3

Practical Application

Step 1

At Practical Completion: attend the PC inspection with the CA and design team; record all outstanding snagging and defects; confirm the PC date (critical for LAD/retention calculations); instruct first moiety retention release within HGCRA timescales.

Step 2

Update the Final Account Forecast at PC — clearly distinguishing agreed, assessed, disputed, and anticipated items — to give the client an accurate view of the likely settlement range.

Step 3

During the DLP: maintain the Schedule of Defects; issue defect notifications promptly; ensure the contractor exercises their right to rectify; monitor progress and record all contractor responses.

Step 4

Close out all variations and claims systematically — work through the Variation Register, apply contractual valuation rules, request full substantiation for loss and expense claims, document all agreements in writing.

Step 5

Once all defects are made good, confirm issue of the Certificate of Making Good Defects; instruct second moiety retention release; prepare the Final Valuation and Final Account Statement.

Step 6

Agree the Final Account with the contractor's QS — produce a signed-off Final Account Statement identifying the total sum due; ensure any residual disputes are referred before the Final Certificate is issued.

Step 7

Prepare the Cost Plan Reconciliation and Final Cost Report — showing movement from original contract sum to final outturn, explaining variances, and identifying lessons learned for future estimates.

Step 8

Complete BCIS elemental cost analysis, submit data to BCIS, and file the Final Cost Data Collection in the firm's knowledge base for future benchmarking.

Step 9

In the event of contractor insolvency: (i) verify the insolvency type (liquidation, administration, CVA, receivership) via Companies House or the insolvency practitioner; (ii) secure the site and arrange interim insurance; (iii) immediately carry out an accurate valuation of works to date — overpayment is very difficult to recover from an insolvent estate; (iv) prepare the Notional Final Account (see illustrative format below); (v) liaise with the insolvency practitioner — they will negotiate for the highest possible valuation to maximise returns to creditors; (vi) procure a replacement contractor and establish the additional completion cost (which forms part of the post-termination account formula under JCT SBC/Q 2016 Clause 8.7.4); (vii) after completion, prepare the Completion Final Account showing the net balance due to or from the contractor's estate.

The Notional Final Account — illustrative structure (JCT SBC/Q 2016 Clause 8.7.4 formula):

Source: RICS Termination of Contract, Corporate Recovery and Insolvency (GN 104/2013), Appendix A. Where (A) exceeds (B+C+D) a balance is due to the contractor's estate; where (B+C+D) exceeds (A) the excess is a debt owed to the employer.

Section 4

Common Mistakes to Avoid

Failing to advise clients of the 28-day challenge window after the Final Certificate — once that deadline passes, the certificate is conclusive and disputed items are lost.
Releasing the second moiety of retention before the Certificate of Making Good Defects is formally issued — premature release creates a recovery problem if further defects emerge.
Leaving variations open without written agreement — as memories fade and people leave projects, unresolved variations become entrenched disputes that cost far more than their value to settle.
Failing to distinguish between patent defects (visible at PC), latent defects (discovered later, within limitation period), and design defects (designer/D&B contractor liability) — incorrect categorisation leads to incorrect advice.
Omitting the BCIS cost analysis or treating it as optional — it is a professional obligation under RICS Cost Analysis and Benchmarking (2nd ed.) and contributes to the benchmarking database on which the profession relies.
In insolvency: overvaluing the contractor's work in the period immediately before insolvency is confirmed — under HGCRA 1996 s.111(10), a withholding notice is not required once insolvency is established, but any overpayment made before insolvency will be very difficult to recover from the insolvent estate; accurate interim valuations are therefore the QS's most important insolvency risk mitigation tool (RICS Final Account Procedures, s.4.16).

Section 5

APC Competency & Quick Reference

Contract Practice Level 3 — advising on Final Account procedures, retention, conclusive certificate risk, insolvency provisions
Quantity Surveying & Construction Level 3 — Final Account preparation, cost reconciliation, BCIS analysis
Project Financial Control and Reporting Level 3 — Final Cost Report, budget vs outturn reconciliation
Corporate Recovery and Insolvency Level 2/3 — Notional Final Account, insolvency practitioner liaison, JCT Clause 8 termination provisions

What financial events are triggered at Practical Completion under JCT SBC/Q 2016?

First moiety of retention released (Clause 4.20.1); LADs cease to accrue; DLP commences (Clause 2.38); risk in the works passes to the employer; contractor must submit Final Account within 3 months. The PC date is critical for all of these calculations and must be confirmed in writing without delay.

What is the significance of the Final Certificate under JCT and how should the QS advise the client?

Under JCT SBC/Q 2016 Clause 4.15, the Final Certificate is conclusive as to the sum due unless either party commences adjudication, arbitration or litigation within 28 days of issue. The QS must advise the client of this deadline before the certificate is issued and ensure all disputes are referred in time. Any dispute not referred within 28 days is irrecoverable.

What is a Notional Final Account and when is the QS required to prepare one?

A Notional Final Account is the account prepared by the QS when the contractor becomes insolvent (or the contract is terminated). Per RICS Termination of Contract, Corporate Recovery and Insolvency (GN 104/2013) s.4.2.1.1, it 'assesses the party's liability to the insolvent company and shows the implications on the contract.' It calculates what the contractor would have been entitled to receive had it completed the works (Figure A in the JCT Clause 8.7.4 formula), and is prepared as soon as insolvency is confirmed. It may be higher than the pre-insolvency anticipated final account because it reflects the full cost implications at the date of insolvency. A separate Completion Final Account is prepared after the replacement contractor finishes the works, incorporating completion costs and losses to determine the net balance due to or from the contractor's estate. Key authority: Levi Solicitors LLP v Wilson [2022] EWHC 24 (Ch) — confirmed the standard payment regime ceases and the insolvency settlement mechanism under JCT Clause 8 applies exclusively.

Section 6

Completion & Final Account Checklist

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Task

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PC inspection attended and Schedule of Defects prepared

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First moiety retention release instructed at PC

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Final Account Forecast updated at PC — agreed/assessed/disputed items distinguished

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DLP defect notifications issued promptly and contractor responses recorded

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All outstanding variations agreed and documented in writing

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Certificate of Making Good Defects received before second moiety retention released

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Final Account agreed, Final Account Statement produced and signed

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Cost Plan Reconciliation and Final Cost Report issued to client

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BCIS elemental cost analysis prepared and submitted

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If contractor insolvency: insolvency type verified; site secured; accurate valuation to date completed; Notional Final Account prepared and issued to insolvency practitioner; replacement contractor procured; Completion Final Account prepared after works completed

Section 7

CPD Learning Outcomes

Identify the contractual financial triggers at Practical Completion under JCT SBC/Q 2016 and NEC4 and advise clients on their obligations and deadlines.
Apply RICS Final Account Procedures and RICS Defining Completion guidance to manage the settlement of the Final Account professionally and within contractual timescales.
Prepare a Notional Final Account in the event of contractor insolvency in accordance with RICS Termination of Contract, Corporate Recovery and Insolvency (GN 104/2013), applying the JCT Clause 8.7.4 post-termination account formula and liaising with the insolvency practitioner to protect the employer's financial position.

Section 8