Signed final account statement

The 2004 case Hurst Stores and Interiors Ltd v M L Europe Property Ltd raised the question of whether a signed final account statement was binding (either a full final account or an elemental section of a final account). The judge held that this may not be sufficient to bind the parties to an agreement, especially if there is a mistake embedded into that final account.

Common practice, however, suggests that if the contractor's surveyor and professional quantity surveyor (or contract administrator) have properly measured and valued the account (or elemental account) then, unless a bona fide error is uncovered, the final account, supported by a signed Statement of Final account, will represent the full and final settlement of the project works.

For example, if we consider the JCT Intermediate Form of Contract then there is a clear requirement for the contractor to provide the quantity surveyor or contract administrator with ALL documents reasonably required for the adjustment of the contract sum, within 6 months after practical completion of works.

No later than 3 months after receipt of all of this information, the quantity surveyor or contract administrator must prepare a final account statement and prepare this statement and all computations must be sent to the contractor for comment and/or agreement.

Therefore, after a maximum of 9 months from the date of practical completion, the final account must be submitted by the quantity surveyor/contract administrator to the contractor.

In practice, however, this process can become quite protracted, especially with larger, more complex projects where there have been numerous instructions, amended drawings and client changes.

This occurs because the contract requires the contractor to provide ALL information to the quantity surveyor, who then prepares the account. This process will, however, throw up many other queries from the quantity surveyor that the contractor will then have to support with additional information.

Furthermore, there may be any number of remeasures to prepare and agree, all of which take a considerable time to negotiate.

It is therefore imperative with larger projects that the final account is worked upon throughout the duration of the project and that the contractors' quantity surveyor and the professional quantity surveyor negotiate and agree the final cost of work sections as they are completed. (See Example structure for final account.)