Interim Valuation

Interim valuation is the formal process of calculating the cumulative value of work completed on a construction project up to a specific assessment date, in order to establish the amount due for an interim payment. Under the Housing Grants, Construction and Regeneration Act 1996, any construction contract with a duration longer than 45 days must include provisions for interim payments. This means interim valuations underpin almost every significant construction project in the UK. The process typically runs monthly, with the contractor submitting an application for payment and the client's quantity surveyor or contract administrator checking and certifying the sum due.

What Goes Into an Interim Valuation

An interim valuation is a cumulative document: it covers the total value of work completed from the start of the contract to the current date, not just the work done since the last assessment. The certified interim payment is calculated by deducting the previous certified amount from the new total, then applying any deductions.

The detailed build-up typically includes:

• Work executed - measured against the bill of quantities, activity schedule, or agreed milestones
• Preliminaries - site setup costs, staff costs, insurance, and time-related overheads
• Variations - additional or changed work instructed since contract start
• Loss and expense - costs arising from delay or disruption caused by matters within the employer's control
• Off-site materials - items manufactured or procured but not yet on site, subject to pre-agreed contractual conditions

From this gross total, the contract administrator deducts retention (held back until practical completion and the end of the defects liability period), any liquidated damages accrued, and other agreed set-off amounts. The resulting net figure is issued in an interim certificate, which triggers the client's payment obligation.

Why Valuations Matter for Cash Flow

Accurate interim valuations protect the contractor's cash position. An undervaluation forces the contractor to fund materials and labour from their own reserves. An overvaluation creates risk for the client if the contractor abandons the project before completing the works - a scenario that standard retention mechanisms are designed to mitigate.

The process also creates an audit trail. Properly documented valuations, with supporting evidence for variations and loss and expense amounts, are far easier to negotiate into the final account than claims assembled only at project end. Contractors who maintain accurate records throughout - of work completed, instructions received, and costs incurred - are significantly better positioned when the final account is prepared.

Zigaflow allows contractors to raise progress invoices directly from the job record, linking each interim invoice to the underlying costs, purchase orders, and job milestones. This makes it straightforward to track cumulative certified amounts against actual job expenditure and identify any variance before it compounds.