How to check interim valuations and prepare the final account

Each month the contractor submits a valuation stating the cumulative percentage complete of each sub-package. That percentage, applied to the contract sum, determines the monthly payment. Verification of that progress by the design team is the only protection against two opposite risks: paying for work not carried out, which is an unjustified cash advance to the contractor, or refusing to pay for work that has been carried out, which harms the contractor and attracts interest.

Verification is carried out jointly. The economist or the contract administrator inspects the site with the contractor's representative, records the real progress, and issues the verified payment certificate. Where the progress claimed differs from the progress observed, the reduction is notified to the contractor with its justification.

In this example the frame was reduced from 65 % to 55 % on verification: the ducts awaited by the mechanical services trades were preventing the second floor pour, as observed on the joint inspection. The ten-point reduction represents 17 835 € withheld on that sub-package. It is notified to the contractor with the verified certificate, before the client pays.

The financial dashboard aggregates, month by month, the payments made on each package and compares them against the budget. It lets the client see the financial position of the works in real time and catch drift before it becomes uncontrollable.

• Standard columns: package, contract sum, approved variations, revised contract sum, cumulative payments, financial progress in per cent, balance remaining, overrun alert.

• The three warning signals: financial progress above 95 % with works not yet accepted, which risks a negative balance; cumulative variations above 10 % of the original contract, which needs flagging to the client; and a payment refused by the client, which risks bringing the site to a halt. These warning thresholds are this page's own: no text sets a warning threshold for a monitoring dashboard, and 10 % is not a ceiling. In a public works contract, a low-value modification is limited to 15 % of the original contract sum, cumulatively, and to the European threshold (R2194-8 and R2194-9); a modification based on additional works or unforeseen circumstances is limited to 50 % of the original contract, modification by modification, for a contracting authority (R2194-3 and R2194-5).

A variation changes the original contract, in quantity, in the nature of the work or in time. In a public contract that refers to the CCAG-Travaux 2021, it does not have to come before execution: the design team's site instruction that changes the time for completion, the duration or the amount of the contract, approved beforehand by the client, has the work carried out at provisional prices, fixed by the design team with the client's agreement after consulting the contractor; the variation then settles the final prices, unless the contractor has made no observation within thirty days (art. 3.8.1, 13.4 and 13.5). In a private lump sum contract, by contrast, the extra must be authorised in writing, with an agreed price, before execution (Civil Code, art. 1793); failing that, it is only due if the client accepts the work expressly and unequivocally once it has been carried out.

• An item already in the pricing schedule: revised quantity × the schedule rate. This is the simplest case, since the price is contractually defined.

• An item in the schedule of rates: quantity × the scheduled rate, valid where the schedule of rates has been made contractual.

• A new item with no contractual price: three possibilities, a price negotiated on the contractor's quotation, a price built up from net cost plus the overhead and profit percentage set in the conditions of contract, or a market price agreed between the parties.

ℹ The variation not signed before execution: the classic trap Additional work carried out with no signed variation in place is the hardest of all to value. The contractor can claim payment, but the client can dispute the amount for want of a price agreed beforehand. Good practice: every change identified on site should trigger, in a public contract, a site instruction approved beforehand by the client and valued at provisional prices, then a variation that settles the final prices; in a private lump sum contract, a written agreement on the change and its price, before execution. Site instructions never converted into variations create informal debts that feed the disputes at final account.

The final account is the document that definitively settles the contract between client and contractor. Signed by both parties, it operates as a receipt: once signed, the contractor can claim nothing further and the client can claim no overpayment.

ℹ Price adjustment: the item most often forgotten In a public contract, price revision is provided for in the conditions of contract when the contract is concluded at a revisable price, which is the form adopted when the parties are exposed to major risks arising from the reasonably foreseeable change in economic conditions during performance (R2112-13), with no minimum duration; a works contract at a firm price provides instead for its updating, which applies if more than three months separate the tender from the start of performance (R2112-10 and R2112-11). In a private contract, the price variation clause is the one in the contract. It compensates for the inflation of construction costs during the period. It is calculated by a parametric formula based on the construction cost indices published by INSEE. On a 500 000 € contract executed over 20 months with index inflation of 4 % a year, with the works spread evenly over the 20 months and a linear rise in the index of 4 % a year counted from the start of the works, with no fixed term in the formula, the adjustment comes to roughly 4 % × 10/12 ≈ 3,3 % of the contract, or about 16 700 €; the base value of the index is that of the month in which the tender was submitted (CCAG-Travaux 2021, art. 9.4.4), so any interval between the tender and the start of the works increases this amount further. It is systematically forgotten in badly prepared final accounts, and a late claim for it can reopen an account both parties thought closed.

Steps 5 and 6 are the critical ones for closing the contract. The cut-off for the draft final account, 30 days from notification of the acceptance decision (CCAG-Travaux 2021, art. 12.3.2), is a hard date: if the contractor does not submit within it, it can lose the right to claim certain items. Conversely, if the design team does not respond within the contract period, the contractor's draft becomes the final account by default.

• Valuations never verified: a contract whose valuations were paid without joint verification usually ends with significant overpayments at final account, hard to recover without litigation.

• Variations never formalised: additional work carried out with no instruction and no signed variation creates informal debts that the contractor claims at the end and the client can dispute.

• Price adjustment forgotten: calculating it late reopens discussions on an account the parties believed closed.

• A final account the contractor never signed: an account drawn up unilaterally by the design team has no effect as a receipt, and the contract stays open to claims.

• Liquidated damages never notified during the works: damages have to be notified in writing as the contractual dates are missed. Applying them for the first time at final account creates a dispute every time.

The monthly valuation is verified jointly: progress claimed is compared against progress observed on site, and any reduction is notified before payment. The financial dashboard aggregates the payments month by month and catches drift in real time. Variations have to be signed before execution; additional work with no prior variation creates informal debts that end in dispute. The final account has six sections: contract summary and variations, account of works executed, price adjustment, damages, retention, and the final balance. Price adjustment is the item most often forgotten. The sequence from draft to signed final account runs on strict cut-off dates, and missing them is expensive.

The nature of the figures quoted

The percentages and amounts quoted on this page are orders of magnitude for framing, not measurements. They illustrate mechanisms and proportions, and they substitute neither for a tender exercise nor for an estimate prepared on drawings.

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