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:
- Prime cost sums.
- Provisional sums.
- Payments to nominated sub-contractors or nominated suppliers.
- Statutory fees.
- Payments relating to opening-up and testing the works.
- Loss and expense.
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.
 Related articles on Designing Buildings Wiki
- Base date.
- Construction contract.
- Contract sum analysis.
- Final account.
- Final certificate.
- Interim certificates.
- Outturn cost.
- Provisional sums.
 External references
- JCT: Deciding on the appropriate JCT contract.
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