Final settlement
Final settlement refers to the resolution and closure of all financial matters and claims between contracting parties upon the completion of a construction project.
It typically involves:
- Agreement on the final cost of the project (final account), including all variations, adjustments, and claims. It covers the total amount due to the contractor, considering all works carried out, approved variations, and any other contractual adjustments.
- Any outstanding claims or disputes between the client and contractor. This includes issues related to delays, defects, and any additional costs incurred.
- The final payment due to the contractor. This amount reflects the final account and any deductions for liquidated damages, defects rectification, or other contractual penalties.
- Release of retentions, a portion of payments retained by the client to ensure completion of the works and remedy of defects. Upon final settlement, these retentions are typically released, often after a defects liability period has passed.
- The issuance of certificates, such as the Practical Completion Certificate and the Certificate of Making Good Defects, formally acknowledging that the project has been completed to the required standards and that any identified defects have been rectified.
Final settlement marks the end of the contractual relationship in terms of financial obligations, ensuring no further claims can be made post-settlement, provided no latent defects or fraud is involved. Final settlement is crucial as it ensures both parties have a clear and agreed-upon understanding of the project's financial outcome, providing financial certainty and closure.
[edit] Related articles on Designing Buildings
Featured articles and news
Deputy editor of AT, Tim Fraser, discusses the newly formed society with its current chair, Chris Halligan MCIAT.
Barratt Lo-E passivhaus standard homes planned enmasse
With an initial 728 Lo-E homes across two sites and many more planned for the future.
Government urged to uphold Warm Homes commitment
ECA and industry bodies write to Government concerning its 13.2 billion Warm Homes manifesto commitment.
Places of Worship in Britain and Ireland, 1929-1990. Book review.
The emancipation of women in art.
CIOB Construction Manager of the Year 2025
Just one of the winners at the CIOB Awards 2025.
Call for independent National Grenfell oversight mechanism
MHCLG share findings of Building Safety Inquiry in letter to Secretary of State and Minister for Building Safety.
The Architectural Technology Awards
AT Awards now open for this the sixth decade of CIAT.
50th Golden anniversary ECA Edmundson awards
Deadline for submissions Friday 30 May 2025.
The benefits of precast, off-site foundation systems
Top ten benefits of this notable innovation.
Encouraging individuals to take action saving water at home, work, and in their communities.
Takes a community to support mental health and wellbeing
The why of becoming a Mental Health Instructor explained.
Mental health awareness week 13-18 May
The theme is communities, they can provide a sense of belonging, safety, support in hard times, and a sense purpose.
Mental health support on the rise but workers still struggling
CIOB Understanding Mental Health in the Built Environment 2025 shows.
Design and construction material libraries
Material, sample, product or detail libraries a key component of any architectural design practice.
Construction Products Reform Green Paper and Consultation
Still time to respond as consultation closes on 21 May 2025.
Resilient façade systems for smog reduction in Shanghai
A technical approach using computer simulation and analysis of solar radiation, wind patterns, and ventilation.