A final account statement is a comprehensive financial document that reconciles the total cost of a completed construction project with the agreed contract sum. It represents the final settlement of all financial matters between the client and the contractor, taking into account all completed work, variations, adjustments, claims and retentions arising during the project.
The main purposes of a final account statement are to:
- Confirm the final project cost: it provides a detailed breakdown of the costs incurred, so that both the client and the contractor understand the final cost and how it compares with the original contract sum.
- Reconcile discrepancies: it identifies and reconciles any differences between the original contract sum and the final cost, such as variations, claims or other adjustments made during the project.
- Close out financial matters: it forms the basis for the final payment to the contractor, so that all financial matters between the parties are settled on completion.
- Provide a record for future reference: it allows both parties to review and analyse the project’s financial performance and make informed decisions on future projects.
Preparing a final account statement typically involves the following steps:
- reviewing all project documentation, including the contract documents, interim payment certificates, variation instructions and claims;
- verifying the measurements and quantities of the completed work, including any variations or adjustments made during the project;
- calculating the final cost of the project, taking into account all completed work, variations, claims, retentions and any other financial adjustments;
- preparing a detailed breakdown of the final cost, comparing it with the original contract sum and reconciling any differences;
- submitting the final account statement to the client and the contractor for review and agreement, followed by the final payment.
The preparation and agreement of the final account statement is a crucial part of the quantity surveyor’s role, as it ensures a transparent and fair settlement of all financial matters between the client and the contractor on completion of the project.
