Though there are five phases to a construction project — concept, planning, execution, performance monitoring, and closeout, most projects consider just two: planning and execution. People theorize much about the value of lessons learned and archiving during closeout, but this rarely gets done on real projects.
Project closeouts are a tedious but essential part of any construction project. This guide will help you understand what exactly it means to close out a project and why it is crucial. We’ll also explore the various types of construction closeouts and the elements associated with them and provide actionable tips for a successful project closeout.
What Is a Project Closeout and Why Is It Important?
A project closeout refers to the final phase of a construction project. During this process, all the final documents are collected, assembled into one project deliverable package, and is sent and presented to the client who requested the project build.
In many cases, this phase is known as the time between completion and the general contractor obtaining the last payment. However, not all closeouts are the same. The size of scope and overall budget for the project plays a significant role in the closeout length. For example, a $10 million project may take approximately three years to officially close out.
When one project nears completion, it generally means that another one is starting. It’s important to ensure everyone involved has a smooth translation process.
Project closeouts can also help with the following:
- Helps with detailing objectives: The project closeout process ensures that your team achieved all goals and objectives outlined in the contract.
- Satisfaction and trust: A successful project closeout can help bring satisfaction and build trust with the client who requested the build. This can help you win further projects.
- Helps improve transferable skills: Conducting a successful project closeout can provide you some insight into the process so you can repeat it and improve on it for future projects.
Types of Construction Closeouts
The construction closeout procedure may seem simple from a distance. However, when you get into the weeds, you’ll quickly realize that it’s a complex process with many moving parts. To conduct a successful project closeout, you’ll need to ensure that all areas of the project are covered. Let’s delve into the different types of construction closeouts so you can perform each one successfully.
Project Closeout
The project closeout is the main process where all documents will be assembled and handed over to the client to confirm that you’ve met all the requirements outlined in the contract. The project closeout process includes:
- Gathering all necessary documentation
- Reviewing any change orders and modifications
- Making sure all other specifications are met as outlined in the contract
- Presenting the information to the client
- Resolving any client feedback
- Closing out any open contracts
- Assembling a project takeaway document to help improve the process for future projects
To reduce errors and inefficiencies, you may want to consider spending some time researching and investing in integrated construction management software
Client Closeout
While the project closeout process covers the whole project, the client closeout portion focuses on providing the client with all pertinent paperwork. That may include warranties, project change records, and equipment information.
This phase can ultimately make or break a relationship with a client. If you provide a comprehensive overview of the project and demonstrate that all work was completed according to the details or the contract, you can increase stratification and potentially earn future projects with the client.
Additionally, this is a good time to ask the client for specific feedback. That feedback can be used to help improve processes for future projects and it shows the client that you care about the work.
Organizational Closeout
The organizational closeout involves removing all equipment and the workforce from the job site. You’ll need to alert your employees and the subcontractors about what day they’ll need to be off the work site. This process also includes conducting an inventory check for equipment used to fulfill the project.
Subcontractor Closeout
The subcontractor closeout phase is where you double-check to ensure that all subcontractor work was completed as outlined in the contract. This process should be done before you give the subcontractors payment. Providing adequate feedback during the closeout can help them improve as well.
Team Closeout
The last process is referred to as the team closeout. Here, you’ll want to consult with the greater team to determine and evaluate the overall success. Some things to consider may include:
- Learning outcomes
- Problems to avoid on future projects
- Ways to improve for future projects
Elements of a Project Closeout
There are various elements and deliverables included in a project closeout. Let’s delve into each one to help you better understand each component.
Punch List
A construction punch list is a comprehensive to-do list of outstanding items to complete, traditionally created as the project is about to finish, during the inspection and commissioning phase. As each item is addressed, it’s checked off or “punched” in reference to the days when a hole was literally punched next to each completed item.
Inspections
Once the construction is completed, you should conduct a final inspection. The project manager generally schedules meetings with officials to help infinity any issues that might have been missed during the walkthrough. Various aspects of the building will need to be inspected, and that may include:
- Foundation
- Plumbing
- Electrical
- Mechanical
- Ceiling
After the building passes inspection, you’ll obtain permits that should be included in the closeout paperwork. However, missed inspections can cause delays in the closeout process.
Document Accumulation
One of the most important aspects of a project closeout is accumulating the documents that need to be sent to the client. Everyone involved in the project will need to provide documentation that outlines what they worked on. Some of the common documents gathered may include conceptual plans, submission forms, construction plans, requests for information (RFI), safety documents, etc.
Finances
For a construction project to be officially wrapped up, final payments need to be delivered. The payment is usually a percentage of the total contract but that is all dependent on what the contract states.
To maximize efficiency, project owners may implement preliminary notices or mechanics liens to send to contractors. This practice is starting to become more prevalent in the industry as 51% of project owners delivered a preliminary notice in 2021, according to a Construction Cash Flow & Payment Report.
Tips for a Successful Project Closeout
A successful project closeout generally means the project was completed successfully. Any errors that require additional paperwork to be filed can delay the closeout process and cause overspending. Here are some tips to help conduct a successful project closeout with a management software platform.
Use the Benefits of Knowledge-Driven Planning
Many organizations are undergoing a ‘digital transformation,’ rethinking how expertise and competencies could be captured and reused for the betterment of the organization and the projects they take on. The organizations that will come out ahead will find a pragmatic approach to applying new technologies to support their digital initiatives.
We have been developing an AI Planning Assistant and home/repository for project knowledge. That is a solution that assists in developing project schedules and cost estimates. At a high level, this program makes informed suggestions to the planner as to what the duration, costs and sequence of work should be based on the context of what you are building. Tell the program you are building a commercial office building, and it will come back with the scope, timelines, activities and costs typically associated with building such a project.
This all sounds like magic. It’s really just very clever computing using a machine learning AI technique. It gets its ‘knowledge’ by understanding what happened in the past on previous projects.
Understand Project Knowledge Types
Today, the program stores multiple sources of project information in a knowledge library. It uses these numerous sources to then make informed suggestions. The more sources you interrogate, the higher the chance your research will be sound. The same is true when it comes to interrogating the knowledge library. Sources of stored knowledge include:
- Historical as-built CPM schedules: Very powerful for helping with the development of high-level (levels 1-3) timelines as well as templating and submitting a detailed CPM schedule
- Project cost estimates: Typically, deliverable and quantity-based
- Project risk registers: Helpful in tracking common project bottlenecks and problem areas
- Productivity rate tables: Ideal for building detailed plans based on quantities, rates and crew sizes.
Today, more and more organizations are turning to the program to help them build better project schedules that are highly realistic and achievable with a lower degree of risk than they would have otherwise carried using a traditional CPM-type scheduling program alone. The real challenge has been feeding valid project knowledge into the program to make it smart enough to give valuable suggestions. There is, however, a remedy for this.
Knowledge Cleansing
Historical as-built schedules tell us a lot about how we performed on a project, but they don’t always represent the norm in terms of typical timelines and estimates. For example, the historical project in question may have incurred delays due to unforeseen risks or poorly defined scope.
To overcome this, we have developed a technique called Knowledge Cleansing, enabling you to take your historical as-built schedules and load them into your knowledge library with the confidence that they will be used appropriately when making suggestions.
So how do we do this? The program carries out a cleansing technique that adjusts and normalizes the durations and costs associated with the historical information captured in the knowledge library. The cleverness of this normalization is that you, as the owner of the knowledge, get to define what factors you want to consider as part of the normalization.
- Did geographical location impact productivity?
- Were your construction durations longer than expected due to specific risks?
- Was engineering over budget due to poorly defined scope in specific areas of the project?
By identifying these factors and then tagging the relevant parts of your project(s) with these, the program can normalize the knowledge to a more typical or standard suggestion. For example, if our fabrication were carried out in China, the costs would be 20% less than the standard cost rates, but the durations might be 10% greater due to a lack of expertise. By enhancing the knowledge library with these multiple normalization factors, the suggestions that are then made by the program are automatically adjusted, accounting for these discrepancies.
The net result is that you don’t have to spend time and money sanitizing the data that you load into your knowledge library. This cleansing is done in the program itself.
Adopt a Standardized Process
Similarly to CPM schedules being cleansed in the knowledge library using the factoring approach described above, we can also normalize suggestions based on attributes other than project performance.
By providing context, you can factor in attributes such as project location, type of sub-contractor, execution location, the complexity of the scope, uniqueness of the project, etc., and the program can make the necessary adjustments to its suggestions. For example, say the standard pipelay productivity rate is $30K per linear km but based on the fact the project is in Northern Alberta, this rate increases by 10%. In addition, if it takes one day to lay 3 km of pipeline, that productivity rate can be factored based on the location of Northern Alberta and adjusted accordingly when suggestions are made to the planner.
Adopting a standard productivity rate table and then applying influencers or factors eliminates the need for and complexity of having to store multiple rate tables for all possible combinations of location, complexity, or other attributes.
Best Practices for Digitizing Project Closeout
While all contractors and owners look forward to completion day, the final process of getting there is something no one enjoys. The closeout phase is rarely resourced adequately, often because the most highly skilled people have already left the project, contributing to both a brain drain and a skills shortage. Closeout can become a critical failure point without the right tools to manage all aspects — operational, administrative and financial — of the effort.
A comprehensive closeout checklist is straightforward, with all contractors and owners having such a checklist in their back pocket. But with digitalization and BIM technologies, the checklist and process can be accomplished more effectively.
Accomplishing an effective closeout requires rethinking the documentation collection, validation and delivery process, leading to a platform with the capability to:
- Manage a contractually binding owner’s standard
- Check and validate deliverables throughout the project design and construction phases
- Provide a single source of easily accessed as-built information that’s continually updated
- Reduce risk of repeated as-built efforts and cost for the same location
- Maintain as-built data in its native file format for easy re-use
Maximize Efficiency by Automating Your Closeout Process
Though closeout has largely been seen as a ‘check the box’ type exercise in the past, we can now see that the how do we build something aspect is truly repetitive across projects. With the benefits of knowledge-driven planning, we can do a much better job of re-using our past project experiences to help forecast more future project successes, more often. Request a demo of InEight software and see how we can make a positive difference in your construction project performance.
