Construction valuations: what they are, how they are calculated and what the owner should check
Construction valuations are documents that show which works have been completed up to a specific date and how much should be paid for them.
To prepare one, the quantities actually completed are checked — for example, the square metres of flooring laid, the walls built or the installations completed — and the prices agreed in the quotation or contract are applied.
This allows the owner to know how much work has been completed, what amount had previously been paid and how much is due at that particular time.
In a private construction project, the system must be explained in the contract. It should specify who prepares the measurements, who reviews them and how often the valuations will be issued. It should also clarify how additional works are approved.
What are construction valuations?
A construction valuation is a technical and financial document that assesses the works completed up to a specific date.
To prepare it, the actual measurements taken on site are used and the prices set out in the quotation or contract are applied. The result shows the value, up to that point, of the works that have already been completed.
In a private construction project, the contract must define the procedure. Not all construction projects follow exactly the same system, nor are the same people involved in precisely the same way. It is therefore important to establish from the outset:
- How often the valuations will be issued.
- Who will prepare the measurements.
- Who will check and approve the document.
- How long the owner will have to review it.
- When the corresponding invoice will be issued.
- How variations and unforeseen works will be handled.
- Whether retentions, advance payments or other financial conditions will apply.
What are construction valuations used for?
This financial control is an important part of managing a construction project in an organised way and avoiding improvised decisions during the works. In other words, it helps prevent the owner from paying in advance for work that has not yet been carried out. Construction valuations make it possible to:
- Know how much work has been completed.
- Check which works or items from the quotation are being charged.
- Compare the quantities completed with those originally planned.
- Avoid paying for outstanding work.
- Identify financial deviations in advance.
- Maintain an organised record of payments.
- Identify changes compared with the original quotation.
- Estimate the amount still outstanding until the construction work is completed.
Construction valuations do not replace the technical supervision of the works. Nor do they guarantee, by themselves, that every task has been carried out correctly. Their purpose is to assess the financial value of the completed work, while quality control remains the responsibility of the relevant technical professionals.
Who prepares and who reviews a construction valuation?
The procedure depends on the contract and the organisation of each construction project.
In most cases, the construction company prepares a proposal detailing the works completed during that period.
Once the proposal has been prepared, the architect and quantity surveyor responsible for supervising the project review the quantities, check the progress and correct any discrepancies before approving the document.
Owners or developers must also receive enough information to understand what is being valued. This does not mean that they have to personally measure every wall, floor or installation, but they should be able to identify:
- Works included in the valuation.
- Proportion of work already completed.
- Amount approved in previous valuations.
- Any variations that have been incorporated.
- The amount still outstanding from the quotation.
In a private construction project, the contract should state who prepares the valuation, who reviews it and when payment is made.
The rules governing public works do not always apply to private construction projects. The procedure should therefore be adapted to what has been agreed between the owner and the construction company.
How often are they issued?
Construction valuations are often prepared monthly, particularly for projects of a certain duration. However, a different frequency may be agreed.
They may also be linked to specific milestones, such as:
- Completion of the earthworks.
- Construction of the foundations.
- Completion of the structure.
- Completion of façades and roofing.
- Progress of the installations.
- Completion of wall coverings and finishes.
Monthly valuations provide more continuous monitoring. Milestone-based valuations, on the other hand, may be easier to understand. However, each phase must be clearly defined to avoid uncertainty over when it is considered complete.
In either case, the frequency and approval system should be set out in writing before the construction work begins.
Differences between a quotation, a valuation and an invoice
Although they are related, they are not the same document.
Construction quotation: sets out the planned works, their quantities and prices before the project begins.
Construction valuation: records the works that have already been completed and their value.
Invoice: the tax document used to request payment.
Final works certificate: technically confirms that the construction work has been completed.
What should the owner check before approving a construction valuation?
Even where there is a project management team responsible for technical supervision, the owner should be able to understand the financial progress of the project.
Before approving payment, the following aspects should be checked.
Clear identification of each item. A precise description of every task included in the valuation, avoiding generic terms such as “miscellaneous”, “extras” or “additional works”.
Correspondence between quantities and completed works. Confirmation that the quantities being valued match the work actually completed and do not include units that are still outstanding.
Verification of the agreed prices. Confirmation that each item is valued according to the prices included in the quotation or contract. Any new price must be explained and justified.
No duplicated quantities. Verification that no work or measurement has been charged more than once in either the current valuation or previous ones.
Documentation of variations. A record of any change made during the construction work, stating what has been changed, how much it costs, who authorised it and whether it affects the schedule.
Consistency between financial progress and the actual state of the project. Confirmation that the amount paid corresponds with the real progress of the construction work. Any significant discrepancy should be clarified before approving the valuation.
How to manage additional works and their prices
During a construction project, works may arise that were not defined in the original quotation or that need to be carried out in a different way.
In these cases, it is not advisable to wait until the valuation is issued before discussing the price. The owner and the construction company should agree on the following points before the work begins:
- The description of the new item.
- How it will be measured.
- The applicable price.
- The possible removal of other items.
- Its impact on the overall budget.
- Its effect on the construction schedule.
When these aspects are documented in advance, the valuation is limited to checking how much work has been completed. When they are not documented, every payment can become a negotiation.
Errors related to the works
- Valuing work that has not yet been completed.
- Including the same quantity twice.
- Confusing stored materials with completed works.
- Using descriptions that are too general.
In addition to checking the completed work before making each payment, it is advisable to understand the construction guarantees that may apply once the project has been completed.
Errors related to payments
- Reviewing only the final amount.
- Applying prices that differ from those agreed.
- Failing to record advance payments or retentions.
- Failing to update the forecast of the outstanding cost.
Do construction valuations prevent cost overruns?
Their purpose is to detect changes sufficiently early and to maintain a clear record of what has been completed, approved and paid. For them to work as a genuine control tool, they must be accompanied by:
- A clearly defined quotation.
- Sufficiently detailed measurements.
- A procedure for approving variations.
- Regular monitoring.
- Communication between the owner, project management team and construction company.
- An updated forecast of the final cost.
When these elements are properly coordinated, the owner knows how much work has been completed, how much has been paid and what amount remains outstanding.
Accurate construction valuations are also part of a well-managed project
The quality of a construction project does not depend solely on how the works are carried out. It also requires clear financial planning, organised documentation and payments linked to the actual progress of the work.
Construction valuations make it possible to know which works have been completed, how much has been paid and what amount remains outstanding. When they are prepared clearly, they make the relationship between the owner, the technical professionals and the construction company easier.
At MLZ Construcción, we approach every project with planning, technical supervision and control of the works. If you are considering building a villa, detached house or high-end home in Marbella, Estepona or on the Costa del Sol, we can help you develop a solid, organised and well-coordinated project from the outset.
