Final Account Settlement in Domestic Building Contracts: A Homeowner's Guide

Introduction

The final account is the definitive financial settlement between the homeowner and the main contractor at the conclusion of a building project. It establishes the final sum due (or the sum already overpaid), taking into account all variations from the original contract sum, all agreed price adjustments, and all deductions for defects or uncompleted work. For homeowners in NW3 undertaking significant projects — extensions, basements, full refurbishments — the final account process can be contentious and requires active management. This guide explains how it works. For related guidance, see our JCT contracts guide, cost overruns guide and defects liability period guide.

What Is the Final Account?

The final account is a statement of the total amount properly payable to the contractor under the building contract, calculated as:

• The original contract sum (the fixed price agreed at tender)
• Plus: the net value of all agreed variations (additions and omissions)
• Plus: any agreed adjustment for provisional sums (amounts included in the original contract sum for unknown items, replaced by actual costs)
• Plus: any agreed claim for loss and expense (where the contractor has incurred additional costs due to events that are the employer's risk under the contract)
• Less: any deductions for uncompleted work or defects not made good

The final account sum is often higher than the original contract sum — this is normal if legitimate variations have been instructed. It is not normal for it to be dramatically higher than the contract sum if the project has been properly managed. See our cost overruns guide.

The Architect's Role in Final Account Settlement

Under a JCT building contract, the architect acts as the contract administrator — issuing instructions during construction, certifying interim payments, and settling the final account. The architect's responsibilities at final account stage include:

• Reviewing the contractor's final account submission — a detailed statement of the contract sum, all variations and adjustments, and the contractor's claimed final sum
• Checking variation claims against the variation log, architect's instructions and agreed pricing
• Assessing and agreeing or disputing any claims for loss and expense
• Issuing a final certificate confirming the sum finally due to the contractor
• Managing the release of the final retention sum after the defects liability period has been completed

An architect who has maintained a variation register throughout the project — agreeing prices for each variation instruction as it arises — will be in a much stronger position to check the final account than one who has allowed variations to accumulate without formal pricing agreement. See our specification guide.

Common Final Account Disputes

The most common areas of dispute in domestic final accounts:

• Unpriced variations: Variations instructed during construction without agreed prices — the contractor claims a higher sum than the homeowner expected. Prevention: always agree prices before instructing variations.
• Provisional sum reconciliation: Where provisional sums are included for unknown groundworks extents, the contractor claims higher actual costs than the provisional. Resolution requires the contractor to provide evidence of actual costs.
• Loss and expense claims: The contractor claims additional costs for delays caused by the homeowner or the architect (late information, variations changing the sequence of work). These claims must be assessed against the contract's loss and expense provisions — not all delays are events entitling the contractor to additional payment.
• Defects deductions: The homeowner seeks to deduct the cost of defects from the final account. The contractor disputes the deductions. Resolution requires the architect's assessment of the fair cost of remediation.

Adjudication for Disputed Final Accounts

If the homeowner and contractor cannot agree the final account, the JCT building contract provides for adjudication — a form of statutory dispute resolution where an independent adjudicator (appointed from a nominating body such as RICS or RIBA) makes a binding interim decision within 28 days. Adjudication is faster and less expensive than litigation, and is the standard first step in construction payment disputes. See our disputes and adjudication guide.

Conclusion

The final account is the financial conclusion of a building project — and it requires the same rigour as the procurement and construction stages. An architect who has maintained variation records, agreed prices formally, and managed the contract actively will produce a clean final account with minimal dispute. An architect who has not will leave the homeowner exposed to inflated final claims. Appointing an architect for the full project service — including contract administration and final account settlement — is the most effective protection. Use our free matching service to find an architect experienced in NW3 contract administration. For cost guidance, visit hampsteadrenovationcosts.co.uk.