The final account reflects the final contract value (including all necessary adjustments) and signifies the final agreed amount that the employer will pay the contractor. In the JBCC the issuing of the Subcontract Final Account and the final payment advice is one of the occasions during the construction project where the timeline and procedures set out in the JBCC Nominated Selected Subcontract Agreement (NSSA) are directly interconnected with the timelines and procedures provided for in the JBCC Principal Building Agreement (PBA) despite the host of changes usually made to the NSSA. Subcontractors very rarely, if ever, have a copy of the JBCC PBA and therefore read the clauses in the JBCC NSSA relating to the subcontract final account and final payment advice in isolation. In this article we will set out full the final account timelines and procedures as provided for in the JBCC NSSA and the PBA.
Preparing and Issuing of the Subcontract Final Account in Terms of the NSSA
In terms of the JBCC NSSA ed6 (ed6.1 and 6.2) the Principal Agent shall prepare and issue the subcontract final account to the Subcontractor within 30 working days (45 calendar days in edition 6.1) of the date of Practical Completion (NSSA clause 26.10 ed6.2). The Subcontractor shall accept the subcontract final account within 20 working days (30 calendar days in edition 6.1) of receipt thereof or deliver a notice of non-acceptance to the Principal Agent setting out the reasons for non-acceptance thereof (NSSA clause 26.11). Clause 26.11 of Ed 6.2 contains a deeming provision which states that if the Subcontractor does not deliver a notice of non-acceptance of the subcontract final account to the Principal Agent within the above period, the subcontract final account shall be deemed to be accepted by the Subcontractor (NSSA clause 26.11 ed6.2). Edition 6.1 does not contain the same deeming provision but does states that should the subcontractor not object to the subcontract final account with reasons, within the above period, the subcontract final account shall be issued (NSSA clause 26.11 ed6.1).
Non-Acceptance or Objection of the Subcontract Final Account in Terms of the NSSA
Edition 6.2 provides that should the reasons for the non-acceptance of the subcontract final account not be resolved within 10 working days of the notice of non-acceptance, the Subcontractor may submit notice of a disagreement (in terms of clause30.1 NSSA) to the Principal Agent to start the dispute resolution procedure (clause 26.12). Should the disagreement not be resolved within a further 10 working day period of receipt of the notice of disagreement, the disagreement shall be deemed to be a dispute and the Subcontractor may follow the dispute resolution procedure as set out in clause 30 of the NSSA ed6. Electrical Subcontractors must be aware of the deeming provision in clause 26.12 (NSSA ed6.2) and make a note of the time period in which he/she can deliver a notice of non-acceptance of the subcontract final account to the Principal Agent, because if the electrical subcontractor fails to issue a notice of non-acceptance within the prescribed period, he/she may be prohibited from proceeding with the dispute resolution procedure to resolve the dispute relating to the subcontract final account.
Edition 6.1 provides for a different procedure in relation to the objection to the correctness of the Subcontract final account. Clause 26.12 in edition 6.1 states that should the objection not be resolved within 10 working days of the notice of objection, the final payment certificate shall be issued within 7 calendar days (NSSA clause 26.12 ed6.1). This clause may lead to some uncertainty as it seems to mean that it will resulting in expediting the issuing of the final payment certificate to the Contractor in terms of the PBA. The subcontractor may give a notice of disagreement (in term of clause 30.1 if the NSSA) if determination was received in response to the objection or if the Subcontractor disagrees with the determination (NSSA clause 26.12 ed6.1).
Preparing and Issuing of the Final Account in Terms of the PBA
The Principal Agent shall issue the final account to the Contractor within 60 working days (90 calendar days in ed 6.1) of the date of Practical Completion (PBA clause 26.10). The Contractor shall accept the final account within 30 working days (45 calendar days in ed 6.1) of receipt thereof or deliver a notice of non-acceptance to the Principal Agent setting out the reasons for non-acceptance (PBA clause 26.11). Clause 26.11 (ed 6.2) also contains a deeming provision which states that the final account shall be deemed to be accepted should the contractor not deliver a notice of non-acceptance within the prescribed period. Edition 6.1 does not contain the same deeming provision but simply states that the failing receipt of an objection to the final account within 45 calendar days, the final account shall be issued.
Final Payment Certificate in Terms of the PBA
After the final account process has been completed, the Principal Agent issues the final payment certificate to the Contractor where after the Contractor issues the final payment advice to the Subcontractor. The final payment certificate will be issued to the Contractor (and to the Employer in edition 6.1) by the Principal Agent within 7 calendar days after acceptance of the final account (PBA clause 26.13 ed6.2 and clause 25.13 ed 6.1) and after the issue of the final completion certificate (PBA clause 1.1 of ed6.2 and clause 25.13 ed6.1).
Subcontract Final Payment Advice
The final payment advice will be issued to the subcontractor by the Contractor within 7 calendar days after the issue of the final payment certificate (NSSA clause 26.13 ed6.2 and 6.1) by the Principal Agent to the Contractor.
Conclusion
A reading of clause 26 of the JBCC NSSA without considering the content of clause 26 of the PBA may result in the Electrical Subcontractor having a misconceived idea of the process and timeline associated with the Subcontract final account and final payment advice. Both the time periods for the issuing of the Final Account (PBA) and the Subcontract final account (NSSA) start from the same point, namely practical completion. Therefore, in theory, this means that the Subcontract final account will be issued (within 30 working days of Practical Completion) and accepted or rejected (within 20 working days receipt of the subcontract final account) by the Subcontractor before the Final Account is issued to the Contractor in terms of the PBA (within 60 working days of Practical Completion). The Subcontractor may have to wait for the Contractor to receive the Final Account (within 60 working days of Practical completion) and accept or reject the Final account(within 30 working days of receipt of final account) before the Final payment certificate issued to the contractor. Only 7 calendar days thereafter will Payment Advice will be issued by the Contractor to the Subcontractor. Furthermore, this is why it is essential that when the electrical subcontractor is appointed that he / she obtains a copy of the signed JBCC PBA. The clauses relating to the Subcontract Final Account and final payment advice in the JBCC NSSA should be read in conjunction with final account and final payment certificate provisions in the JBCC PBA.
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