A construction project closeout is the final phase of a project, when all deliverables are assembled, verified, and handed to the client before final payment is released. It covers five separate handovers — project, client, organizational, subcontractor, and team — and on a large job it can run for years rather than weeks. Closeout is where retention is released, so the pace of it directly affects cash flow for everyone on the contract.
Where Closeout Fits in the Capital Project Life Cycle
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.
Why Closeout Matters, and How Long It Takes
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 are 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, the point at which retention is released. However, not all closeouts are the same. The size of scope and overall budget for the project play 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 transition 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.
What Are the Five Types of Construction Closeout?
The construction closeout procedure may seem straightforward 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 satisfaction 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 future projects
What Has to Be Completed During 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 identify 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. How quickly that final payment lands carries weight well past the end of the job. Slow payment is estimated to cost United States construction $299 billion a year, and 88% of general contractors say they declined to bid on work in the past twelve months because of an owner’s payment reputation. A closeout that drags is not only an administrative problem; it shapes who is willing to price the next project.
What Delays a Project Closeout, and How to Prevent It
Closeout rarely fails for one big reason. It stalls on a handful of recurring ones, and most of them are set in motion long before the final month:
- As-built documentation collected at the end rather than as the work proceeds. Reconstructing a record months after the crews have left is the single largest cause of closeout overrun.
- Deliverable standards agreed at handover instead of at contract. If the owner’s format requirements surface in the final month, the whole package gets reworked.
- Punch items tracked separately from the commissioning record, so the same item gets inspected twice and signed off once.
- The most experienced people demobilized first. Closeout is chronically under-resourced precisely when institutional knowledge is leaving the job.
- Subcontractor closeout treated as a payment step rather than a documentation step, which leaves gaps in the package that only appear when the client reviews it.
Why Closeout Needs More Than a Checklist
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
Where Closeout Software Earns Its Place
The capability list above is the test worth applying to any system: does it hold the owner’s deliverable standard as a rule rather than a document, does it validate against that standard during construction rather than after, and does the as-built record stay in a format the owner can actually use. InEight Completions is built around commissioning and turnover on that basis, checking deliverables against the contracted standard while the work is still live rather than assembling the package once the crews have gone.
