Final Account Agreement

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.

Final Account Agreement is the formal process by which the QS and the contractor's QS negotiate and agree the total financial settlement of the construction contract, producing a signed Final Account Statement that records the Adjusted Contract Sum and extinguishes all outstanding financial obligations between the parties (except for those specifically reserved). It is the culmination of the entire variations and claims close-out process and the direct precursor to the issue of the Final Certificate.

The RICS Final Account Procedures (1st ed.) establishes that the Final Account should be prepared by the QS and checked against the contractor's submission; differences should be resolved by negotiation; and unresolved items must be referred to adjudication, arbitration, or litigation before the Final Certificate is issued — not after, since the Final Certificate is conclusive once the 28-day challenge period passes.

The Final Account Agreement is also the document that provides the financial data for the Cost Plan Reconciliation and the Final Cost Report: once the account is agreed, the QS can prepare the definitive reconciliation showing movement from original contract sum to final outturn and the BCIS elemental cost analysis for benchmarking.

Section 2

Key Principles

RICS Final Account Procedures (1st ed.): sets out the structured process — contractor's submission, QS checking, queries, negotiation, agreement, and final statement; both parties should sign the Final Account Statement.
JCT SBC/Q 2016 clauses 4.25–4.26 and 1.9: the contractor supplies the documents required for adjustment of the Contract Sum not later than 6 months after Practical Completion (clause 4.25.1); the QS issues the statement of adjustments within 3 months of receipt (clause 4.25.2); the Architect/Contract Administrator issues the Final Certificate under clause 4.26; and under clause 1.9 the certificate is conclusive unless proceedings are commenced before issue or within 28 days after it.
RICS Ascertaining Loss and Expense (2nd ed., July 2024): the Final Account must include the fully assessed and agreed loss and expense figure — not a 'holding' estimate; the agreed L&E figure must be substantiated.
JCT SBC/Q 2016 section 4 payment provisions: simple interest is payable on amounts not paid by the final date for payment, at the rate stated in the contract (5% above Bank of England base rate unless amended); the QS must ensure the Final Certificate is issued and paid on time to avoid interest accruing.
RICS Termination of Contract, Corporate Recovery and Insolvency (2nd edition, 2018): where the contractor is insolvent before the Final Account is agreed, the QS must prepare a Notional Final Account; the insolvency provisions of the contract (JCT Clause 8.5) apply to the settlement of monies due.
NEC4 Clause 53: the Project Manager's final assessment is binding unless the contractor notifies a dispute within 4 weeks; the dispute resolution procedure then applies.

Section 3

Practical Application

Step 1

Request the contractor's Final Account submission at PC or shortly after; confirm the contractual submission deadline in writing; if the contractor fails to submit, proceed on the QS's own records after a formal reminder.

Step 2

Check the contractor's submission against your own Variation Account, Claims Settlement, and all project records; prepare a schedule of differences identifying every item where your figure differs from the contractor's.

Step 3

Issue the schedule of differences formally and invite the contractor's QS to a commercial close-out meeting; work through every difference item by item; minute agreements and disagreements.

Step 4

For items where positions remain apart: assess the commercial case for settlement (cost of adjudication vs value of disputed item); obtain client authority for any settlement that involves concession above your own assessment.

Step 5

Once all items are agreed or formally disputed, prepare the Final Account Statement — a clear schedule showing: Original Contract Sum; all agreed additions/omissions; all agreed L&E; all agreed fluctuations; final release of retention; Total Final Account Sum.

Step 6

Issue the Final Account Statement to the contractor for signature. A counter-signed statement is best practice. Note that under SBC/Q the QS's statement of adjustments (clause 4.25.2) is not itself binding and there is no 3-month challenge period; what binds the parties is the Final Certificate, which becomes conclusive under clause 1.9 unless proceedings are commenced before it is issued or within 28 days after it.

Step 7

Notify the CA to issue the Final Certificate; confirm the sum certified and the final date for payment (14 days from issue under JCT); advise the client of the 28-day challenge window and confirm all outstanding disputes have been referred.

Section 4

Common Mistakes to Avoid

Issuing the Final Certificate without confirming that all disputes are either agreed or formally referred — once the 28-day window passes, the Final Certificate is conclusive and disputed amounts are unrecoverable.
Accepting the contractor's Final Account submission figures without independent checking — every figure must be verified against the QS's own records and project documentation.
Failing to obtain client authority before making any concession on disputed items — the QS has no authority to give away the client's money; any settlement above the QS's own assessment requires client sign-off.
Not signing the Final Account Statement jointly with the contractor — a unilateral QS statement of adjustments is valid under JCT clause 4.25.2 but a jointly signed statement is far stronger evidence of agreement and avoids later disputes.
Delaying the Final Account Agreement without a clear programme — the longer the agreement is deferred, the harder it becomes; key project personnel leave, records become inaccessible, and disputes entrench.

Section 5

APC Competency & Quick Reference

Contract Practice Level 3 — Final Account agreement process, Final Certificate, conclusive certificate risk
Project Financial Control and Reporting Level 3 — Final Account Statement, client reporting

What is the process for agreeing the Final Account under JCT SBC/Q 2016 and what are the key timescales?

The contractor supplies all documents reasonably required for the adjustment of the Contract Sum not later than 6 months after Practical Completion (clause 4.25.1). Within 3 months of receipt, the QS prepares the statement of all adjustments to the Contract Sum and the Architect/Contract Administrator ascertains any outstanding loss and expense; copies are sent to the contractor (clause 4.25.2). The Architect/Contract Administrator then issues the Final Certificate not later than 2 months after the latest of the end of the Rectification Period, the date of the Certificate of Making Good, and the date those statements were sent (clause 4.26). The due date for the final payment is the date the Final Certificate is issued, or the last day of that 2-month period if it is not issued, and the final date for payment is 14 days after the due date. Under clause 1.9 the certificate is conclusive unless adjudication, arbitration or legal proceedings are commenced before it is issued or within 28 days after it. SBC/Q contains no 3-month period for either party to notify a dispute.

What should the QS do if the contractor becomes insolvent before the Final Account is agreed?

Apply JCT Clause 8.5 insolvency provisions and RICS Termination of Contract, Corporate Recovery and Insolvency (2nd edition, 2018). Prepare a Notional Final Account including the cost of completion by others, the value of materials on site, and any resulting credit or debit balance. The administrator/liquidator steps into the contractor's position for the purposes of financial settlement.

How should the QS handle a situation where the client wants to accept the contractor's Final Account figures to preserve a commercial relationship?

The QS's professional duty is to their client. The QS can present a recommendation for commercial settlement but must quantify the concession, obtain client authority in writing, and record that the settlement was made on a commercial basis (not because the contractor's figures were agreed to be correct). The QS should never accept figures that are professionally unjustifiable without client authority.

Section 6

Completion & Final Account Checklist

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Task

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Contractor's Final Account submission received and deadline confirmed

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QS independent check completed — schedule of differences prepared

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Commercial close-out meetings held and minutes issued

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Client authority obtained for any concession above QS assessment

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Final Account Statement prepared — all items listed with agreed values

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Final Account Statement issued to contractor for signature

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CA notified to issue Final Certificate; client advised of 28-day window

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All residual disputes formally referred before Final Certificate issued

Section 7

CPD Learning Outcomes

Manage the Final Account Agreement process from the contractor's submission through negotiation to a signed Final Account Statement, in compliance with JCT SBC/Q 2016 clauses 4.25.1–4.25.2 and RICS final account guidance.
Advise clients on the conclusive effect of the Final Certificate under JCT clause 1.9 and ensure all disputes are formally referred before the 28-day window closes.
Apply the insolvency provisions of JCT Clause 8.5 and RICS Termination of Contract, Corporate Recovery and Insolvency (2nd edition, 2018) to prepare a Notional Final Account where the contractor becomes insolvent.

Section 8