A case in point is the final account statement. As far as I can see, pretty much every QS produces this document at the end of each contract: it sets down in writing the total figure that the employer will pay the contractor. Unfortunately, the contract does not usually give it any status.
Under JCT contracts, for instance, the contract sum is adjusted at the end of the contract for a list of defined reasons. These include the usual suspects, such as variations and loss and expense. There is no reference to a statement, even less so to the signing of it by anyone.
However, when a final account total has been arrived at, custom and practice say that the contractor and probably the QS will sign a copy of the final account statement to confirm their agreement to the total. Quite where this procedure came from is lost in the mists of time, but when consulting a colleague's well-worn copy of Practice and Procedure for the Quantity Surveyor, I find that it expects such a statement to be produced almost as a matter of course. The book dates from the 1960s.
What I hesitate to add is that the start of my professional life dates from not much later, and when I was first being taught the rudiments of QS-ing, a final account statement was mandatory and had clearly been around for years.
So why do QSs go through this sign-off process if it is not recognised under the contract – and what does it achieve? It must have some value, if everyone does it.
After the bloodbath of the negotiation, nobody wants the final account figure opened up again
Clarity and certainty are the issues. The contract portrays the final account adjustment process as a purely scientific one of addition, deduction and rate adjustment. The sort of thing that is suited to a bookkeeper. The reality is very different, as those who have been involved will know. Although science does come into the calculation, things are never that clear-cut. Arguments arise about the valuation rules, for example, and whether they have been applied correctly. Should an item be valued in accordance with rates in the contract bills, at adjusted rates or as daywork? There is no conclusive answer to these questions most of the time. Negotiation skills, clear thinking, determination and (unfortunately) aggression are the things that will often win the day.
The final account statement brings a sense of finality to the negotiation. It appears to, once and for all, set down the figure agreed. In many cases, there will be areas where the science has failed and a brisk haggle has settled the account.
The statement cuts through all of this and confirms the answer. After the bloodbath of the negotiation, nobody wants the figure to be opened up again.
The problem is that the statement probably doesn't confirm the agreement in any particularly watertight way – unless there are specific reasons why the parties might be bound by the statement as a separate agreement to the contract. The contract closes off the final account with the final certificate. Without one having been issued, either party can seemingly renege on the final account statement at any time. If you want an agreement that is binding, then you need to go out of your way to produce one.
This will be essential, for instance, when a deal has been done. You know the sort of thing. Loss and expense has been offset against damages due to the employer. Money has been included for acceleration even though the final agreed completion date was not met – or was it? Defects, if they are indeed defects, are to be fixed by the contractor at no cost. All of these issues are contained in one wrap-up figure with payment agreed to be made in instalments related to progress on rectification of defects.
Andrew Hemsley is managing director of consulting at Cyril Sweett and can be reached on 020-7242 9777 or at firstname.lastname@example.org.