Other things to consider when preparing a final account

Changes to Housing Grants, Construction and Regeneration Act 1996 (The Construction Act 2011) came into force in England and Wales on 1 October 2011 and in Scotland on 1 November 2011.

Most of the revisions are around the area of payments and how and when these are made. The key changes are:

• Construction contracts can now be made orally as well as in writing
  This does not materially affect the requirement for the surveyor to measure, value and negotiate the final account.

• Abolition of ‘Tolent’ clauses regarding responsibility for costs in an adjudication
  This could affect the value of a final account. There may be an increase in the number of financial matters being referred to adjudication as there is no longer any potential for lack of finances to fetter a party’s right to adjudicate.

• Abolition of ‘pay-when-certified’ clauses
  This has a clear impact on contract administration and valuation procedures.  It has little overall effect on the way a surveyor compiles the final account. It should be noted that the new Act reaffirms the prohibition of ‘pay-when-paid’ clauses.

• Payment notices
  The change in the contracts is very important to all parties as it places greater responsibility on the contract administrator to issue the payment notice on the contract date whether or not any money is due. This relates to the issue of interim valuations and the sums ultimately payable in the final account will be unaffected.

• Suspension
  The previous suspension rights clause is an ‘all or nothing’ remedy. Failure to pay entitles the contractor to ‘suspend the works’. The current provisions permit the suspending party (it could be either contractor or client) to suspend all, or part, of its obligations.
  It should be noted that the intent here is that suspension of ‘part’ means that it is viable to suspend a complete element without affecting other elements. For example, is not be possible to suspend the electrical installation as this affects the whole project such that the job could not be handed over with only the electrics suspended as the project could not viably be completed.