Demystifying the Effects of Final Accounts Settlement on Building Contractors in Abuja, Nigeria

Abstract

The final account stage of a building project is sometimes rarely settled or even being delayed by some of the project parties, thereby posing serious challenges on contractors. This research examines the effects of non-settled final accounts on contractors with a view to suggesting the best strategies for settlement of final accounts in building projects. A quantitative technique was adopted in this study. The research population constituted the major construction participants consisting of public clients, registered consultants and contractors within Abuja. The stratified random sampling method was adopted. A total of 162 structured questionnaires were administered to the participants from whom a total 119 was retrieved representing 86% response rate. The collected data were analysed using the descriptive methods and Analysis of variance. The research found that the major barriers of procurement methods that must be considered if final accounts are to be settled are: inadequate documentation of records, ambiguity of final account settlement procedure, and silence of contract conditions on final account settlement. Also, unsettled final account will have significant effects on contractors especially in the aspect of cash flow, threat to life of the contractor’s business, financial hardship for the contractor, and contractor’s insolvency. It was also found that the problems could be mitigated through maintaining separate escrow bank account by the client, legal and contractual provision. Based on these findings, it can be concluded that proper management of the identified factors would translate into effective settlement of final accounts in building projects. The research recommends that construction clients and consultants should employ care when selecting a procurement option to be used.