Last edited 30 Sep 2016

Contract sum

The contract sum is the price agreed with the contractor and entered into the contract. The contract sum should be calculated and checked very carefully as errors are deemed to have been accepted by both parties.

The contract sum may be subject to adjustment under the terms of the contract for example:

When the contract sum is adjusted, this adjustment should be taken into account in the valuation of subsequent interim certificates.

Preparing the final account is the process of calculating and agreeing any adjustments to the contract sum at the end of the defects liability period so that the amount of the final payment to the contractor can be determined. The amount of the final payment is then set out in the final certificate (or final statement). NB it is possible for the final certificate to show that money is owed to the client, rather than due to the contractor.

Construction contracts may in fact not require the preparation of a final account, although they generally do require the contractor to provide all documents necessary for the adjustment of the contract sum within a specified time, and set out the time scale for, and consequences of, issuing the final certificate.

On measurement contracts, the contract sum may not be known when the contract is entered into, but instead is calculated as the works progress based on some agreed method of measurement.

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[edit] External references

  • JCT: Deciding on the appropriate JCT contract.