Don’t leave it to the final account

I’m going to sort out my procrastination problem tomorrow.

Mark Twain said, “Never put off until tomorrow what you can do the day after tomorrow.”

Unfortunately some construction projects manage commercial issues this way. How often have you heard the expression, “That will be sorted out at final account”?

The truth is that if you don’t deal with a potential problem at the time it arises, you will lose control over the issue and it will select the path of least resistance until you hit final account when it may become a much bigger problem.

Commercial Assurance

Commercial assurance involves a programme of independent, objective and expert reviews to answer two questions about the commercial management of a contract:

1. Is it broken?
2. If it is broken, what needs to be done to fix it?

It helps to raise problems early so that they can be dealt with quickly and cost effectively. If it isn’t it can lead to problems

The problems arising from leaving it to the final account

• The evidence may not be there to provide you with a conclusive answer

Some contractors operate very weak accounting and administrative processes. If costs are challenged, they may not be able to provide conclusive evidence to support their position. A lost audit trail creates significant uncertainty and forms the basis of difficult commercial issues.

• Contractors may be entrenched

The issue may have grown. If a contractor working on your contract has reported margins to its head office; staff have been paid a bonus; and those margins have been reported through the statutory accounts then it will fight tooth and nail to avoid repaying any amounts it has overcharged.

• There may be confusion over what has or has not been agreed

Staff turnover at both contractors and employers can mean that informal agreements to the Contract may be forgotten or disputed. This is more likely to happen at the end of the project.

• Motivation may be lost

At the end of the project, everyone’s mind is on the next job and you may not achieve the most robust commercial settlement. It’s human nature to want commercial problems to just go away so that the final account can be agreed.