01What is the method in one line?
Final certificate = (final gross on final measured quantities − retention − the whole advance) − the net of all earlier certificates. The retention is then released on its own, on the date the contract sets, less any defect the contractor did not repair.
It is the same cumulative method as an interim certificate. What changes is that the quantities are final, so the differences from the contract quantities show up here.
02How is the final certificate different from an interim one?
| Interim certificate | Final certificate | |
|---|---|---|
| Quantities | Approved to date, still open | Final measurement of every item, closed |
| Compared with | The previous certificate | The previous certificate and the contract value |
| Advance | A share recovered | Whatever is left is recovered in full |
| Retention | Held | Held, then released as the contract states |
| After it | The next certificate | No further certificate on this contract |
03The example contract
The same contract as in the interim example: 1,000,000 in three bill of quantities items, 5% retention, and a 10% advance payment (100,000) recovered at 10% of each certificate's gross. Seven interim certificates have been issued. Tax is left out because it depends on the contract and the country.
04Step 1: the final measured quantity of every item
| Item | Contract quantity | Final quantity | Rate | Final value | Difference from contract |
|---|---|---|---|---|---|
| A. Reinforced concrete | 500 m³ | 510 m³ | 1,200 | 612,000 | + 12,000 |
| B. Blockwork | 2,000 m² | 1,950 m² | 150 | 292,500 | − 7,500 |
| C. Plaster | 4,000 m² | 4,000 m² | 25 | 100,000 | 0 |
| Total | 1,004,500 | + 4,500 |
The work came to 1,004,500 against a contract of 1,000,000. Each difference sits on its own item, so the extra 10 m³ of concrete is a line somebody approved and not a figure that appeared in the total.
05Step 2: the deductions, to date
| Line | Calculation | To date | Certificates 1 to 7 | Final certificate |
|---|---|---|---|---|
| Gross | Final quantity × rate | 1,004,500 | 950,000 | 54,500 |
| Retention | 5% of gross | 50,225 | 47,500 | 2,725 |
| Advance recovery | 10% of gross, stopped at the advance | 100,000 | 95,000 | 5,000 |
| Net | Gross − retention − recovery | 854,275 | 807,500 | 46,775 |
The final certificate pays 46,775. The two ways of reaching it agree: 854,275 − 807,500, and 54,500 − 2,725 − 5,000.
Note the advance: 10% of 54,500 is 5,450, but only 5,000 of the advance was still outstanding, so 5,000 is what is recovered. Recovery stops at the amount that was paid in advance.
06Step 3: the closing check
| Line | Amount |
|---|---|
| Advance paid at the start | 100,000 |
| Net of all certificates, 1 to final | 854,275 |
| Retention still held | 50,225 |
| Total | 1,004,500 |
The three add up to the final gross. If they do not, something was paid outside a certificate or deducted twice, and this is the last point at which it is cheap to find.
07Step 4: releasing the retention
When the retention is released comes from the contract: all of it at the end of the defects liability period, or part at handover and the rest at the end. The arithmetic is the same either way.
| Line | Calculation | Amount |
|---|---|---|
| Retention held | 5% of 1,004,500 | 50,225 |
| Defect repaired by others | The repairer's bill | − 3,000 |
| Released to the contractor | 47,225 |
In the example one defect was not repaired by the contractor and was fixed by someone else for 3,000, with the bill behind it. The contractor receives 47,225, and in total 100,000 + 854,275 + 47,225 = 1,001,500, which is the 1,004,500 of work less the 3,000 repair.
08Where do final certificates usually go wrong?
- The final certificate is built from the contract quantities, not the final measurement, so differences like the 10 m³ and the 50 m² here are never settled
- Advance recovery runs at its percentage one last time and takes more than was left (5,450 here, not 5,000)
- The retention is paid inside the final certificate by habit, before the date the contract sets
- A defect is deducted from the retention on an estimate, with no bill behind it
- Payments made outside the certificates, such as a site advance or materials bought for the contractor, are not brought into the closing check
- A subcontractor's final certificate is closed before the main contract's final quantities are agreed, so the two ends do not match
09How does Revora do this?
Revora construction, by mbsystems, follows the same lines:
- The contract is entered with its value, its retention percentage, its advance payment and its tax
- The certificate is written per item: the submitted quantity first, then the technical office review, then approval with the approved quantity
- Each certificate calculates its own gross, retention, advance recovery, tax and net
- The approved quantity locks onto the item, so the next certificate starts from what is left of it, not from the claim
- The contractor's account shows earned, paid, retained and outstanding on each contract
- Payment is made from a treasury with an accounting entry written behind it, and is refused when the treasury does not cover it
- Subcontractors have their own certificates, with their own retention, under the same project
Ask for a demonstration on your own bill of quantities: info@mbsyss.com, or Cairo +20 100 520 5900, Muscat +968 7277 7269, Vienna +43 681 8411 0547. The price is given as a quote for your company.
Book a live walkthrough on your own data, or ask for a quote for your company.