Guest Blog: Closing out construction projects – what you need to know …

Closing out construction projects successfully

Many construction projects are financially successful until the end, when costs suddenly spiral out of control. The main reason for the additional costs is because the project wasn’t completed on time. When I say completed, I don’t just mean handed over, I mean one hundred percent finished. Many Construction Project Managers focus only on handing over the project. However, there’s normally more to a project than this. It includes finalising punch lists, finishing and submitting all paperwork (including as-built drawings, quality data packs, guarantees and warranties) and concluding all the contractual obligations (such as commissioning and testing).

The impacts of not closing out construction projects on time

Failure to complete construction projects correctly, including completing all paperwork and documentation, results in increased costs to construction companies due to:

1. the project extending beyond the contractual end date, often resulting in the application of penalties or liquidated damages
2. construction resources remaining on the project longer than budgeted for
3. resources not being released to other construction projects where they’re required, which negatively impacts those projects
4. retention money and sureties being retained longer by the client
5. insurances remaining in place for a longer time
6. the contractor incurring additional overheads, such as the costs of facilities, accommodation, vehicles and security remaining on site longer

Needless to say the failure of the construction company to complete all outstanding items can be very frustrating to clients and they usually incur additional costs for their supervision as well as inconvenience and disruption to their operations.

What needs to be considered

Some of the items which should be considered when closing out construction projects include:

1. obtaining the certificate of practical completion
2. handing over quality documentation, commissioning data, spare parts lists and warranties to the client
3. handing over all spare parts and unused client-purchased materials to the client
4. getting the release of sureties or bonds and returning them to the institution which issued them
5. requesting the release of retentions
6. putting items of equipment off-hire and transferring them from site
7. clearing unused materials
8. moving personnel records to the head office
9. sorting, filing and archiving project documentation
10. agreeing the final accounts with the client
11. settling accounts with subcontractors and suppliers
12. moving personnel records to the head office
13. submitting the final project invoice to the client
14. demobilising all offices and facilities
15. reinstating lay down areas and access roads, including obtaining signed acceptance from the client
16. handing back all accommodation
17. disconnecting services
18. transferring or terminating personnel
19. disposing of project-purchased assets
20. completing the final cost report

The completion schedule/programme

To facilitate the timely completion of the project, a completion schedule should be prepared near the end of the project. This would typically include:

1. finishing the outstanding items
2. commissioning
3. connecting to existing services and structures
4. completion of the contractor’s punch-list items
5. final punch-listing by the client
6. preparation of hand-over documentation such as quality records, commissioning results, operating manuals and guarantees
7. clearing of the temporary site facilities and services

Conclusion

Closing out construction projects can often be a complicated and time-consuming process often underestimated and overlooked by Project Managers and staff who may already be anticipating moving to their next projects. If proper planning and preparation is done at an early stage the close out process will be much simpler. It will save costs and frustration to both the client and the contractor’s staff.

How you finish a construction project is often how the client remembers the construction company!

Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books. To read more visit www.pn-projectmanagement.com.

© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.