Why accounts stall
The usual pattern is a single meeting at which everything is on the table: measured work, variations, extensions of time, prolongation, defects and retention. Each item affects the others, nobody wants to concede anything before seeing the whole, and the meeting ends with a gap and no method for closing it.
What follows is months of correspondence in which each party restates its position at length. Very little of that changes anybody’s mind, because the disagreement was never about the arguments.
The accounts that close quickly are the ones that were broken into pieces and taken in an order.
The same applies to the interim position. An account that has been reconciled every few months during the works arrives at the end as a short list rather than as a reconstruction, and the parties have already agreed most of it without ever calling it a negotiation.
Agree what is not in dispute
The first step is establishing the agreed base: measured work both parties accept, variations already assessed and agreed, and any element where the figures already match.
This is unglamorous and it is the most useful hour in the process, because it usually reveals that the genuine gap is a fraction of the apparent one. An account presented as being millions apart is often a few substantial items apart, with everything else already aligned.
It also changes the tone, because the parties have started by agreeing rather than by arguing.
It helps to agree the sequence with the other side explicitly at the outset, rather than imposing it. A contractor with a competent commercial team usually welcomes it, because a structured process closes items and gets them paid, whereas an open ended negotiation ties up their resource as much as yours.
Take entitlement before value
Next come the items where entitlement is in question: is this payable at all. Those are contractual questions with contractual answers, and they can be resolved by reference to documents rather than by negotiation.
Settling entitlement first removes items from the table entirely in both directions. Something that is not payable does not need valuing, and something that is clearly payable can then be valued without either party pretending otherwise.
Mixing the two produces the trade that ruins accounts: value conceded in exchange for entitlement, or the reverse, with no principle behind either.
Then value, then time
Valuation of the agreed entitlements comes next, and it is the part that behaves most like arithmetic if the pricing document supports it.
Time is taken last, because extension of time and prolongation are the items with the most analysis behind them and the least common ground. Taking them first stalls everything else behind an argument that may take weeks.
Prolongation is also the item where the sequence matters internally: the entitlement to time comes before the entitlement to money, and the money is then a matter of demonstrating actual loss rather than applying a rate. We covered that in prolongation cost claims.
Defects and retention last
Retention and outstanding defects are settled at the end, partly because the work may still be in progress and partly because they are the practical remedy if anything else remains unresolved.
Releasing retention before the account is agreed removes the only immediate mechanism the employer holds. It happens regularly, usually as a goodwill gesture during a difficult negotiation, and it rarely improves the outcome.
The related mechanics are in defects liability and retention release.
What this means for you
Before the first meeting, ask for the account to be split into the four groups above and take them in that order. It is a procedural request and it changes the shape of the negotiation entirely.
Where a settlement is being pressed as a single round figure, that figure is usually somebody’s starting position dressed as a conclusion. It is worth asking what it is composed of before responding to it.
Running an account this way is what our final accounts and disputes work does, and our post on settling early versus fighting on covers the decision that sits behind it.
A note on timing. Final accounts are settled faster when they are started before practical completion rather than after, because the people who know what happened are still on site and the records are still current. Waiting until the contractor has demobilised removes both advantages at once. Running the sequence on your behalf is part of what a client side quantity surveyor is appointed to do.