Article #281 Expediting the Issuance of an Auditable and Traceable Single Version of the Truth Statement of Final Account on Capital Construction Projects

Regardless of the type of contract agreement used on a construction project, the final account is the conclusion of the contract sum (including all necessary adjustments) and signifies the agreed amount that the Employer will pay the Contractor. It includes any works that are paid to the Contractor through the main contract. For example, the FIDIC suite of contracts, Clause 14 refers to payment and subclause 14.11 spells out the final account process and timescales.

Typically, the final account includes any loss and expense associated with any extensions of time and any other claims the contractor feels he or she is due under the contract. It also indicates the finalization of any disputes that may have arisen and in that sense draws a line under the financial obligations of both parties, save in respect of defects. The final account will typically include items such as:

  • Provisional Sums which are allowances included in a fixed price construction contract for an item of work that cannot be priced by the contractor at the time of entering the contract.
  • Prime Cost Items which are allowances made for a specific supply item, where the final choice of the item has not been made at the time of entering the contract.
  • Claims made by the Contractor including those for Extension of Time (EOT)
  • Contra-Charges or Deductions for Liquidated Damages or Withheld Sums for construction defect claims or what is considered to be defective works.
  • Any other expenses that could impact the final payment due to the Contractor

Using a Project Management Information System (PMIS) that is specifically designed for managing the delivery of capital construction projects like PMWeb, the cost management processes needed for the statemnet of final account will be readily available out of the box. The statement of final account needs the three processes of commitment contract, change orders and progress invoices. Each one of those processes and similar to other project management processes managed in PMWeb, an output form can be designed in any desired form and format to display the needed information in the required layout that will be aligned with the Employer color branding and logo. The output form can be designed to include needed contractual wording and statements. The output form can be designed to be digitally signed using DocuSign if the DocuSign signature was applied to the workflow steps. The output forms and reports displayed below are examples of what come ready out of the box with PMWeb.

In addition, for each one of those statement of final account needed processes and similar to other project management processes managed in PMWeb, supportive documents can be either attached directly to the process or uploaded into PMWeb document management repository and then attached to the relevant process transaction. The latter is the recommended approach. In addition, links to other PMWeb records as well as imported MS Outlook emails can be added to each process.

Further, each one of those three statement of final account processes will have a workflow for the actions taken by the contract management team to review and approve each process transaction. The workflow will define the duration and sequence of tasks to be performed by the different contract management team members as well as the review actions permitted at each workflow step. The workflow could also include conditions to ensure that the approval authority levels are adhered to. In addition, the workflow could define alerts level for delayed workflow steps. If the DocuSign Integration was used, the workflow steps can be configured to all use DocuSign to capture the digital signature.

The first PMWeb module to be used for the Statement of Final Account is the Commitment Contracts module which will be used by the Employer to capture the details of all awarded contracts to all Contractors as well Consultants and Suppliers. The module will include all payment terms and conditions as defined in the contract. For lump sum contracts, the contract bill of quantity items added to PMWeb could be summarized at bill of quantity level if desired. Each item included in the commitment contract needs to be linked to the relevant cost account level also known as the cost breakdown structure. This will be needed to consolidate the value of the final statement of account.

The second PMWeb process to be used is the Commitment Change Order module which will be used to capture all Approved Variation Instructions (AVI), Provisional Sums, Prime Cost Sums, Claims, Contra-Charges, Deductions among others. The Commitment Change Order module type field will have a predefined list of values to match the change documents used on the project. The user of the form needs to select the needed form type. This is important as the assigned workflow to the Commitment Change Order module could include conditions that are aligned with the values of those types.

Similar to other PMWeb modules, an output form and log or register can be designed for each commitment change order type showing all needed details. The output form could also have links to the uploaded documents associated with each change order transaction as well as details of all contract management project team reviews made using the assigned workflow. In addition, the change order report can be designed to have links to the relevant change order of each reported transaction. The report can be configured to include visuals to summarize the details of change orders by types and status. The output forms and reports displayed below are examples of what come ready out of the box with PMWeb.

The last PMWeb process is the Progress Invoice module where the line items will include all approved change order transactions for all types for which they will directly impact the final value of the contract. PMWeb progress invoices will automatically adjust the current period invoice amount depending on the last approved progress invoice. In addition, PMWeb progress invoice allows capturing the actual payments made against each approved progress invoice.

The above proposed solution provides capital construction projects’ Employers with a quick yet proven, auditable, traceable and single version solution for generating the statement of final account. A solution that will adhere to all formal review and approve requirements to enforce transparency and accountability as well as captures all documents and records needed to finalize the statement of account. The solution that can be easily configured to produce all needed output forms and reports that respect the Employer reporting and branding requirements. A solution that is readily available and does not need the massive cost and time to reinvent the wheel. A solution that adheres to the best practices of lean construction management.

About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services and project management information system to over than 200 projects with a total value in excess of US $100 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment, Hospitality and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training and business development.

Bassam is a frequent speaker in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 40 years he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 300 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).

Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.

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