Final Accounts in Construction: How to Agree One Without the Four-Day Argument

Last verified: October 2026

It’s the second day of the final account meeting. The client’s QS has a list of 140 variations, the contractor’s QS has a list of 163, and neither list has the same numbers against the 120 they have in common. Somebody remembers that the drainage reroute was agreed at £18,000 on a site walk last March. Nobody wrote it down. The meeting will run for two more days and the job, which made money on paper every month, will finish wherever the argument lands.

A final account is the agreed statement of what a construction contract is finally worth, once every change, deduction and adjustment to the original contract sum has been counted. The short glossary definition covers the term. This guide is for the people who have to agree one on a UK job: how the JCT and NEC final account process works, how interim valuations, variations, contra charges and retention roll up into it, where disputes start, how adjudication fits in, and what to do during the job so the final account is a formality.

What a final account is

Interim valuations are estimates. Each month the work is valued, retention is held back, a payment is certified, and everyone accepts that the number might be a little high or low because it will be corrected later. The final account is the correction. It sets the contract sum once and for all, and it is the last point at which money can move without a claim or a court case.

The structure is the same on almost every job:

• the original contract sum
• plus or minus variations (changes under JCT, compensation events under NEC)
• minus provisional sums and their actual cost added back
• plus loss and expense, fluctuations (if the clause was not struck out) and any other contractual additions
• minus deductions such as liquidated damages, the cost of defects not put right, or contra charges on a subcontract
• equals the adjusted contract sum, less everything paid to date, which gives the final payment

That last figure can be negative. If the client has overpaid on interim valuations, the final account shows money owed back to them.

A contractor usually runs two kinds of final account at once. One goes up to the client under the main contract. Several go down to subcontractors under each subcontract, which is where contra charges and retention release to the supply chain sit. The margin on the job is the gap between the two, and a CVR is the monthly forecast of where that gap will end up.

How the final account works under JCT

The JCT forms all build towards a due date for final payment, but they get there differently. The figures below are from the 2024 editions as summarised by Fenwick Elliott and RICS isurv. Check the Contract Particulars on your own job, because most of these periods can be changed. For the payment cycle that leads up to it, see JCT payment terms and timeline.

JCT Standard Building Contract

Under the Standard Building Contract the contractor does not prepare the final account. It supplies the documents needed to adjust the contract sum, no later than six months after practical completion. The contract administrator, or the quantity surveyor if instructed, then has three months from receiving them to prepare the statement of the final adjustment. If the contractor sends nothing, the contract administrator can make its own assessment from whatever information it has.

The Final Certificate follows. It is issued no later than two months after the last of three events: the end of the Rectification Period, the issue of the certificate of making good, or the sending of the statement. The due date for final payment is the last day of that two-month window.

JCT Design and Build Contract

Under Design and Build the contractor prepares a Final Statement and submits it within three months of practical completion, with the supporting documents the employer reasonably asks for. If it is late, the employer can give two months’ notice, and after that prepare its own Employer’s Final Statement. The due date for final payment is one month after the last of the end of the Rectification Period, the notice of completion of making good, or the submission of the statement.

Three months is early, so most contractors’ first Final Statement is an opening position that moves during negotiation until the due date.

The 28-day trap

JCT has few time bars during the job, but the main forms make the Final Certificate or Final Statement conclusive evidence once it takes effect: conclusive that extensions of time have all been given, that loss and expense has been fully dealt with and, under the Standard Building Contract, that every adjustment to the contract sum has been made. That conclusive effect only stops if one party starts adjudication, arbitration or court proceedings within the short window the contract sets, 28 days in the standard wording.

The courts enforce this. In the Marc Gilbard case the judge held that anything left out of the dispute referred within the window became conclusive, so a notice of adjudication should be drafted broadly. Under Design and Build there is one extra route: a party can give notice disputing the statement before the due date for final payment, and the High Court held in CC Construction v Mincione that this notice alone was enough. The Standard Building Contract has no equivalent, so a letter saying you disagree will not protect you there.

How the final assessment works under NEC4

NEC was designed to make the classic final account unnecessary. Compensation events are notified, priced and implemented during the job, so the account should be mostly agreed by the time the work is done. NEC3 had no final account clause at all. NEC4 added a final assessment, and JCT vs NEC for cost control covers the wider difference in approach.

Under the NEC4 Engineering and Construction Contract the Project Manager assesses the final amount due and certifies any final payment no later than four weeks after the Supervisor issues the Defects Certificate, or thirteen weeks after a termination certificate. Payment follows within three weeks unless the Contract Data says otherwise. If the Project Manager does nothing, the Contractor can issue its own assessment.

The assessment then becomes conclusive evidence of the final amount due unless it is disputed under the Option W procedure that applies. Under Option W2, the usual choice on UK work covered by the Construction Act, that means notifying the dispute within four weeks and then going through Senior Representatives or straight to adjudication. The time limits are short and enforced.

The other NEC deadline that shapes the final account is earlier. The Contractor has to notify a compensation event within eight weeks of becoming aware of it, and in most cases loses the right to more time or money if it does not. Missed notifications rarely come back in the final assessment.

From interim valuations to the final account

A final account is only hard when it is the first time anyone adds everything up. If every monthly valuation carried the same running list of variations, agreed and pending, the final account is the last valuation with the retention released and the provisional sums adjusted. If each valuation was rebuilt from scratch in a new spreadsheet, the final account means reconstructing two years of decisions from email.

The habits that make the difference are dull ones:

• Keep one running contract sum: original sum, plus every variation, with its status (instructed, priced, agreed, disputed).
• Carry the full variation list on every interim application, not only the ones you expect to be paid this month.
• Agree the value of each variation in the month it happens, or at least agree the basis: dayworks, schedule of rates, a quote, or a cap.
• Keep the payment notice and any pay less notice against each application, so you can show what was certified and why.
• Run a forecast final account in the monthly CVR, so the commercial team knows what the job is heading for long before the meeting.

The valuation process is where those habits either happen or don’t. If valuations, variations and retention live in the same place each month, the final account has already been drafted twelve times by the end of the job.

"The standout feature for us is definitely the valuation process. It is incredibly intuitive and so easy to use."

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Lee Covington Owner  ·  E&N Group Ltd  ·  London, United Kingdom

Variations: where most final account disputes start

Most final account disputes are about variations: work done on a verbal instruction, never priced. Work priced but never accepted. A design development that the contractor treats as a change and the employer treats as part of the original scope, which matters most on Design and Build where the contractor carries the design. The JCT guide describes the same pattern: the real contract sum only exists in someone’s personal spreadsheet.

Three things keep variations out of the final account argument:

1. Get the instruction in writing before the work starts, from someone with authority to give it. An email from the contract administrator counts. A conversation on site does not.
2. Price it straight away, or agree the valuation method if the work has to start first. Values agreed while everyone still remembers the work are rarely reopened. Values argued a year later get traded against each other.
3. Track it against the budget line it affects and against the subcontract order that delivers it, so the client variation and the subcontractor’s variation stay matched.

That last point is easy to miss. If the client agrees a variation at £12,000 and the subcontractor’s version of it lands at £14,500, the contractor has lost £2,500 that nobody noticed until the subcontract final account. Variation and retention management goes through how to keep the two sides linked.

Contra charges on subcontract final accounts

On the subcontract side, the main contractor’s own deductions are the usual flashpoint. Contra charges (also called back charges) are costs the contractor deducts from what a subcontractor is owed: cleaning up after them, repairing damage they caused, providing attendance or labour they should have provided, or finishing work they left. They are legitimate when the subcontract allows them and the cost is real. They become a dispute when they appear for the first time in the final account, months after the event, with no record of what happened.

Two rules from the Construction Act shape how contra charges should be handled. A payer who intends to pay less than the notified sum has to give a pay less notice before the deadline, stating the sum it considers due and how that sum was calculated. A contra charge applied without a valid pay less notice can be challenged, and a subcontractor can adjudicate it. So:

• Notify the subcontractor when the event happens, with photos, timesheets or invoices.
• Deduct it on the next valuation through a proper pay less notice.
• Keep the deduction visible against that subcontract order, so it reaches the subcontract final account as a line both sides have already seen.

A subcontractor who has seen every contra charge month by month rarely fights the final account over them. Collecting subcontractor payment applications in one system makes this much easier, because the deduction sits next to the application it reduces.

Retention release and the final account

Retention is the last money to move, so it often becomes the hostage. Under JCT contracts half of the retention is usually released at practical completion and the rest when defects have been made good at the end of the rectification period. Under NEC4 retention only applies if secondary Option X16 is in the contract. What is retention in construction covers the percentages, the timing and the government’s confirmed plan to ban retentions, which is still waiting on an implementation date.

The final account is where the second half of retention should come back, as a line in the final payment. The common problems are clerical: the release date was never diarised, the defects certificate moved, the retention on twenty subcontracts was never reconciled with the retention the client is holding. A contractor can end up releasing retention to subcontractors before receiving its own from the client, or holding a subcontractor’s retention long after the contract says it was due, which is a dispute of its own.

"When we used to do our month-end CVRs it could usually take 3-4 days to put them together. It now takes me 10-15 minutes to just quickly go through the jobs and check that I haven’t missed anything."

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Claire Hill Estimator and quantity surveyor  ·  Brown & Bancroft Interiors  ·  Bolton, United Kingdom

When the final account becomes a dispute

Most final account disputes settle without a formal process. The two QSs work through the variations in a Scott schedule (one row per disputed item, each side’s value and reason in adjacent columns), settle what they can, and leave a short list for the commercial directors. Without-prejudice negotiation is normal and useful at that stage.

When it does not settle, the routes are:

• Adjudication. The Construction Act gives every party to a construction contract the right to refer a dispute to adjudication at any time. The adjudicator should be appointed and the dispute referred within 7 days of the notice, and the decision is due within 28 days of referral, extendable by 14 days with the referring party’s consent. The decision binds both sides until the dispute is finally decided by agreement, arbitration or the courts.
• NEC Senior Representatives. Under Option W2 the parties can refer the dispute to their Senior Representatives first, who produce a list of issues agreed and not agreed. Adjudication on what is left follows within a short deadline.
• Arbitration or the Technology and Construction Court, for disputes that adjudication does not end or that are too large to fit into 28 days.

Adjudication is quick and cheaper than litigation, but 28 days is short for a whole final account, and the side with dated instructions and priced variations usually does better than the side with the better argument. Starting adjudication also keeps the JCT Final Certificate from becoming conclusive, so contractors sometimes issue a notice of adjudication simply to protect their position while talks continue.

The RICS guidance note on final account procedures gives the same advice: agree adjustments as the job goes and keep the records that prove them.

How live variations and valuations shorten the final account

The meeting in the opening paragraph is two people rebuilding the same history from different spreadsheets. Software helps when the contract has been kept current every month, so there is nothing to rebuild.

That is what Planyard is for. It sits on top of Xero, QuickBooks or Sage and keeps the commercial side of each job in one place:

• Client contracts with a live contract sum: every variation is logged against the budget line it affects, with its status, so the original sum, agreed variations and pending variations are visible at any time.
• Client valuations with retention calculated automatically, built from the same contract and variation list each month (Professional plan and above).
• Subcontract orders with their own variations, including deduction variations, and subcontractor payment applications checked against the order, previous valuations and the budget before approval (Ultimate plan).
• A live CVR and job profitability forecast, so the forecast final account moves as costs and valuations come in.

For JCT projects, JCT payment application software explains how applications, payment notices and pay less notices are tracked against each period. Planyard prices start at £82 per project manager per month on Essential; client valuations, variations and retention are on Professional at £123, and subcontractor payment applications on Ultimate at £164. Supporting staff are £33, and every plan has a 14-day free trial.

Final accounts still need a QS to judge what a variation is worth and what the contract allows. Planyard takes away the reconstruction work, which is where most of the four days go.

A final account checklist

1. At contract signature: diarise the practical completion date, the rectification or defects period, the document deadline and the dispute window. Note any amendments to the final account clauses.
2. Every month: carry the full variation list on the valuation, agree values while they are fresh, issue pay less notices for contra charges, and update the forecast final account in the CVR.
3. At practical completion: release the first half of retention to the supply chain if your contract and subcontracts say so, and start the final account draft from the latest valuation.
4. Before the deadline: submit your documents or Final Statement on time, with the instructions, quotes and timesheets that support each variation.
5. When the certificate or assessment arrives: check it within a few days. If you disagree, take advice and start the dispute process inside the window, covering every disputed item.
6. After agreement: close every subcontract final account, release the remaining retention and record the outturn margin against the original estimate.