Commercial close
In the UK construction industry, commercial close refers to the stage in the procurement process when all commercial and financial terms of the contract have been agreed by the parties involved, but before the financial close. It signifies that the parties have finalised the negotiation of the commercial aspects of the deal, and the contract is ready to be executed, though the project may still await final financing arrangements.
This requires that all parties have reached an agreement on the pricing, scope of work, risk allocation, schedules, performance standards, and other commercial terms adn that the contract documents, including detailed specifications, payment schedules, and penalty clauses, are finalised and ready for signing.
The contracts, agreements, and any necessary collateral warranties or side agreements are fully drafted and agreed upon by all parties and legal due diligence is completed, ensuring that all contractual documents comply with relevant laws and regulations.
The parties are prepared to sign the contracts, subject to finalising the financial aspects of the project, and any conditions precedent to contract execution, such as obtaining certain approvals or permits, are either satisfied or on track to be satisfied.
The project is poised for financial close, which involves securing the necessary financing, finalising arrangements with lenders, investors, and other financial stakeholders.
Financial close occurs after commercial close, when all funding agreements are signed, and financial conditions are met. It marks the point at which the project can proceed with funding in place, allowing construction to commence or continue.
For more information see: Financial close.
Reaching commercial close ensures that all commercial risks and responsibilities are clearly defined and agreed upon, reducing the potential for disputes later in the project. It demonstrates that the project is commercially sound, which can facilitate securing financing and provides clarity on all commercial aspects of the project, allowing stakeholders to proceed with confidence towards financial close and subsequent construction phases.
[edit] Related articles on Designing Buildings
- Contract award.
- Contracts under seal v under hand.
- Construction contract.
- Construing a contract.
- Contract conditions.
- Contract documents.
- Contract execution.
- Contract negotiation.
- Engrossment.
- Essentials of a contract.
- Financial close.
- Form of tender.
- Glossary of property law terms.
- Privity of contract.
Featured articles and news
The UK’s largest air pollution campaign.
Future Homes Standard, now includes solar, but what else?
Will the new standard, due to in the Autumn, go far enough in terms of performance ?
BSRIA Briefing: Cleaner Air, Better tomorrow
A look back at issues relating to inside and outside air quality, discussed during the BSRIA briefing in 2023.
Restoring Abbotsford's hothouse
Bringing the writer Walter Scott's garden to life.
Reflections on the spending review with CIAT.
Retired firefighter cycles world to raise Grenfell funds
Leaving on 14 June 2025 Stephen will raise money for youth and schools through the Grenfell Foundation.
Key points for construction at a glance with industry reactions.
Functionality, visibility and sustainability
The simpler approach to specification.
Architects, architecture, buildings, and inspiration in film
The close ties between makers and the movies, with our long list of suggested viewing.
SELECT three-point plan for action issued to MSPs
Call for Scottish regulation, green skills and recognition of electrotechnical industry as part of a manifesto for Scottish Parliamentary elections.
UCEM becomes the University of the Built Environment
Major milestone in its 106-year history, follows recent merger with London School of Architecture (LSE).
Professional practical experience for Architects in training
The long process to transform the nature of education and professional practical experience in the Architecture profession following recent reports.
A people-first approach to retrofit
Moving away from the destructive paradigm of fabric-first.
International Electrician Day, 10 June 2025
Celebrating the role of electrical engineers from André-Marie Amperè, today and for the future.
New guide for clients launched at Houses of Parliament
'There has never been a more important time for clients to step up and ...ask the right questions'
The impact of recycled slate tiles
Innovation across the decades.
EPC changes for existing buildings
Changes and their context as the new RdSAP methodology comes into use from 15 June.