A different kind of account
On a traditional measured contract the final account remeasures what was built against a bill, and most of the work is reconciliation. Disagreements are about quantity and rate, and both have a documented basis.
On design and build there is usually no bill. There is a lump sum, a contract sum analysis of varying quality, and two documents describing the building: the employer’s requirements and the contractor’s proposals.
The account therefore turns on scope rather than on quantity. The recurring question is not how much of this was built, it is whether this was in the price at all.
The contract sum analysis is the document that decides how easy any of this will be, and it is prepared at tender when nobody is thinking about final accounts. A thin analysis produced to satisfy a formality gives a valuer nothing to work from two years later, which is when it turns out to have mattered.
Where the arguments come from
Three sources produce most of them. Divergences between requirements and proposals that were never reconciled before signature. Instructions issued during the works whose valuation basis was never stated. And design development, where the contractor says a change is a client change and the client says it is the contractor completing the design they took responsibility for.
That third category is the hardest, because both parties are arguing about what the requirements obliged. A tightly written requirement settles it in a sentence. A loose one produces a negotiation.
This is why the reconciliation exercise before signature is worth so much later. It is also why so few accounts are easy: the exercise is usually skipped.
Provisional sums complicate the picture further on this form of contract, because the sum was carried in a lump sum price and its expenditure has to be substituted rather than simply added. Where several sums were undefined, the programme and preliminaries consequences arrive alongside the work itself, and they are argued separately.
What to assemble
The account needs four things. The contract sum and its basis. Every instruction, with its date, its assessed value and whether it was agreed. The reconciliation of requirements against proposals, if one exists. And the record of what was actually built where it differs from either document.
Assembling that at the end from correspondence is possible and slow. Maintaining it during the works costs almost nothing, because each item is recorded once, when it happens, by somebody who was there.
The difference between the two approaches is usually visible in the settlement figure rather than in the effort. We covered the mechanics in how a construction final account works.
Entitlement first, value second
The sequence matters and it is frequently reversed. Whether the contract obliges the employer to pay for something is a separate question from what it is worth, and it comes first.
Where the two are discussed together, the negotiation drifts into trading: a concession on value in exchange for entitlement that may never have existed. That produces a settlement number nobody can explain afterwards.
Testing entitlement first is slower and produces a defensible outcome, which matters if the account does not settle. We set the principle out in contractual entitlement before value.
Time and its cost
Extension of time and the cost of the extended period are two decisions, and merging them is one of the more expensive habits available. Granting time protects the contractor from damages. It does not by itself entitle them to prolongation cost.
On design and build the analysis is complicated by the contractor controlling the design programme as well as the construction one, so the cause of a delay may sit on their side of the line even where the effect is obvious.
Both questions need the same thing: a programme submitted at tender with enough detail to compare against. Without one, the argument is about impressions.
What this means for you
Start the account during the works rather than at the end, and keep the instruction register and the requirements reconciliation current as you go.
Where an account has already arrived and looks unrecoverable, it is usually not, but the first step is establishing the position rather than responding to the figure.
That is the work described on our final accounts and disputes page, and where we have held the employer’s agent appointment through the contract, the record is already built.
If you take one habit from this, make it the instruction register. A live list showing every instruction, its date, its assessed value and whether time was claimed against it removes the single largest source of dispute on this contract form, which is disagreement about what was instructed at all.