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Project Closeout. (This is mostly additional information. Also refer to Chapter 8 of the textbook.). Overview. The last major phase of a project’s life cycle is the project closeout phase.
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Project Closeout (This is mostly additional information. Also refer to Chapter 8 of the textbook.)
Overview • The last major phase of a project’s life cycle is the project closeout phase. • Project closeout is performed after all defined project objectives have been met and the customer has formally accepted the project’s deliverables and end product. • Project closeout is fairly routine, but it is an important process. • By properly completing the project closeout, organizations can benefit from lessons learned and information compiled at closure.
Overview • The final completion/formal payment may be delayed if closeout is not done properly. • The size of the task of closing out a construction project seems to have little correlation to the size of the project. • Getting that last one percent of the job finished and approved can be as agonizing for a $10,000 project as it is for a $10 million project. • Part of the reason for this dilemma is that there is a vast difference between having the project substantially complete and having it finally complete.
Overview • A successful construction project can be adversely affected by improper closeout procedures. • All contract work must be satisfactorily completed, outstanding claims resolved, change orders fully negotiated and processed, extension of time reports approved, operations and maintenance manuals approved, as-built drawings completed, and all other contract goals achieved. • In addition, all certifications and warranties must be in place. • A proper project closeout must also conform to the client's established procedures.
Complete vs. completed • Substantially complete implies that the project is ready for use by the owner. • The owner may use or occupy the project; the warranties go into effect and the owner assumes responsibility for the operation and maintenance of the project. • Substantial does not mean final. • There may still be a lot of punch list items to complete; • the contractor may have a number of submittals to make to the owner; and • final inspections and paperwork need to be completed before we reach the stage of final completion. • It is awfully easy for those last tasks to take on a lower priority when the pressure is off to get the owner a useable project.
Complete vs. completed • Closing out a project is a real team effort. • It involves • product manufacturers, • suppliers, • subcontractors, • the prime contractor, • consultants, • the architect-engineer and • the owner. • Most standard General Conditions have very definitive procedures for closing out a project.
Procedures • Contractor inspects project and prepares a list of items not completed. • A/E, contractor and owner inspect the work to verify substantial completion. • A/E prepares tentative certificate of substantial completion with attached tentative list of items not completed. • Owner approves a tentative certificate. • A/E prepares definite certificate of substantial completion with a • revised list of items not completed. • Contractor submits notice of final completion. • A/E inspects project to verify final completion. • A/E processes final application for payment and closeout submittals. • Owner makes final payment.
Procedures • If any on of the team members fails to participate in these closeout procedures, the formal completion of the project will be delayed, and sometimes for months. • Getting out of that limbo between substantial completion and final completion can be hastened by a conscious effort by all team members to see that • the punch list items are completed on a timely basis, and • by having the contractor ready at the completion to make some important submittals to the A/E and owner.
Submittals • Final application for payment • Affidavit of payment of debts and claims • Certificates of insurance extending beyond final completion • Consent of surety to final payment • Releases and waivers of liens • Project record documents • Special warranties • Bonds • Maintenance agreements • As-built drawings • Operation and maintenance manuals
Other Items • The A/E should be ready to prepare a final change order, if necessary, to clean up outstanding items that have not been completed, and to make the final inspection and issuance of the final payment. • Unless stipulated otherwise by the contract, final payment constitutes project completion.
Closeout Conference • An effective way to help assure smooth project closeout is to conduct a closeout conference just before the substantial completion to make sure everyone understands the contractual responsibilities. • These responsibilities may have been discussed at the beginning of a project, but months, or even years, can pass before the project nears completion, and it is a good idea to bring the key parties to the table to review those procedures. • A good set of contract documents will define procedures for project closeout. • If all parties conduct their operations in accordance with the contract, getting that last one percent of the project completed will be a lot easier.
Some Critical Aspects of Closeout • Use checklists — lots of checklists. • When planning the other phases of the project, there is usually some logical sequence to completing the tasks. • Most of this disappears during the final 10 percent. • Your focus should now shift to crossing off items on various checklists until none remain. • Don’t allow anyone to work on any item that is not on the checklist. • This is extremely important. • People will always find something more interesting to do than close out punch-list items. • These distractions waste the budget and do nothing to complete the project. • Insist on frequent meetings, sometimes several times a day, to keep the focus on closeout.
Some Critical Aspects of Closeout • Build your firm’s intellectual capital through “lessons learned.” • At the end of each project, collect the lessons learned by the project team and work them into improving the firm’s processes. • Perform the project completion analysis and document what went well and what did not. • Be a learning organization — don’t repeat past mistakes. • Make every effort to safeguard the project records. • If trying to find the back-up calculation for a certain structure is difficult when the project is in the design phase, it’s impossible five years later! • Leaving all your project records in file cabinets until someone else needs the cabinets is not records management.
Some Critical Aspects of Closeout • Don’t forget to ask for a referral from your client. • Make sure this is a routine event at the closeout of every project. • Get the referral on the client’s official letterhead, signed by the most senior manager possible. • Remember, you can always say you did something, but having it in writing from your client is proof you did. • Plan your project completion party at the start of the project. • Successful project teams start by planning for success, then they execute the plan. • If the project schedule indicates the completion party as a separate milestone, the team is looking forward to success. • Make sure you allocate budget to make it happen.
Key Elements • Completion and closeout of any contractual agreements with suppliers or providers • Formalizing customer acceptance • Closeout of any financial matters • Preparation of the project’s final performance report • Conducting a project review • Documenting lessons learned • Completing, collecting and archiving project records • Celebrating project success.
