Contract Close-Out (graded)

One of the most frustrating aspects of contract management to

customers/clients is the length of time that it commonly takes to close
out a project (from an administrative standpoint) after most or all of
the contract scope of work has been completed. The closeout is the
fourth phase in the generic project life cycle where all outstanding
contractual issues are completed and documented in preparation for
turning over the product or service to the customer. What are some of
the activities that need to be performed as part of the contract closeout
functions? What do you think are some of the factors that cause such a
length in delay in the closure of the project/contract?
Contract closeout involves verification of all work and deliverables whether they
have been met as per the contract's scope of work/terms and conditions.
Assessment of the work, cost, schedule and all the issues outstanding should be
reviewed as part of the contract close-out phase. Contract close out also involves
the post completion maintenance required on the project. The delay could
happen because of the change request raised during the contract exceution,
issues in the project, back orders or missing materials, poor management etc.
You should make sure all work is complete and accounted for when it comes
down to the contract closeout. Contract closeout is when you have completed
the entire project. That means submitting on everything you needed to submit
on, buying the job completely out and performing all the work.
As the buyer you need to make sure all parts of the contract have been fulfilled
and that all costs have been captured and all payments are made.
Contract closeout ia a guide to ensure all closeout actions have been
satisfactorily accomplished, functional specialists shall begin taking applicable
actions to close the contract.
One will think that closeouts should be the easiest part in the contract because
it is when acquaintances have been made and everybody is just happy to end
this long, exultant, but sometime treacherous journey. However, specifications,
payroll, over-allocation, bonuses, legal issues, along with training could all cost a
lengthy closure.
The activities that are needed to preform contract closeouts are meetings,
updated financial statements, clear and close communication, setting a close
date, verifying that all deliverables are accepted, and updating records to reflect
final results.
The project needs to be evaluated to ensure that all the milestones have been
met and that the project meets all specifications. The project should be
evaluated and any failures or issues carefully looked at to see how they can be
prevented or mitigated in future projects.
The project should have met all specifications and drawings to the current date.
Everything should have been submitted on and approved before installed.

One of the main processes of a contract closeout would be a thorough

inspection and review of the projects deliverables. The end results of the projects
must be examined to ensure whether or not they meet the expectations of the
stakeholders. By doing this inspection the buyer is deciding whether the seller
will need to revise any of the deliverables or whether the seller will receive pull
or partial payment.

By not performing this review, the buyer is taking risks of paying for sub-par or
unexceptable work. In-turn, stakeholders will not be satisfied and the project will
be viewed as a failure. Precious resources would have been wasted on the part of
the buyer and a new contract with a new vendor, extended deadlines and
increased budget will have to be determined.
To close-out a project successfully, all of the parts have to come together and like
building an entertainment stand that comes in a box, there are a lot of little
pieces. The hardest part during is keeping everything organized. The hardest
part at the end is when you have a part left over - where was that supposed to
go - is the stand going to fall apart without it? If the project was properly
maintained, then pieces should all meet up at the end, "should" being the key
word. Balancing the
Keeping up with the project schedule with prepare you for the project closeout.
If you submit on material and equipment as scheduled and perform the work
according to the project schedule, you
I agree with you and I like how you compared it to an entertainment stand. This
is true to all projects, you can buy cheap, industry standard, and high cost parts.
One thing that could become an issue with closing out a project, is that all RFI's
are answered for project completion. Which in the case of the entertainment
stand, do I need another pieces to make it stronger, last longer, or am I missing a
piece. This could cause the project to prolong longer than it should.
Closeout is completed when all administrative actions have been
completed, all disputes settled, and final payment has been made.
Here is a list of actions to accomplish to close a contract as they are applicable:
Review contract data and confirm all deliveries accepted
Identify and Deobligate Excess Funds
Complete any price revisions
Ensure all subcontracts are settled by the prime contractor
Indirect costs are settled
No outstanding value engineering change proposals (VECP)
Final patent report is cleared

Final royalty report is cleared

Termination docket is completed
Contractors final closing statement is completed
Contractors final invoice has been submitted
Contract audit is completed
Deobligate funds: Deobligation of excess funds is one of the contract
administration functions normally delegated to the Administrative Contracting
Office at the Contract Management Office
Who do you think typically drags out the close-out process, the owner
or the vendor? Support your answer.
I think it would be the lack of effort from a certain party by not getting all
contracts sign closed out or vendors agreeing to time constraints deliveries and
etc... Both parties should have an urgency to get the job done and have all I's are
crossed and the T's are dotted
In my opinion, it is the customer or the owner who would drag the close-out
process as they would like to make sure that all the deliverables or scope of the
contract has been met. There are various activities that customers/owners would
want to be completed before the contract close out occur. e.g. Unloading of
production and test databases, Return of customer equipment, Return of
customer software or tools/data, Copies of all methodologies or technology used
to provide the services. Owner has much more at stake at the time of close out
and he would like to make sure that transition is completed successfully so that
there are no project issues at a later point of time.
It is usually the owner not wanting to sign off on the final product.
vendor is usually motivated by wanting that last payment!

The

The delay has something to do with the contract closeout activities, such as the
procurement audits and the performance measures. Therefore, the delay is on
the owner making sure that everything involving the contract has been
processed and closed before notifying the vendor that the project is
Another reason for delays in closing a project is due to constants "add-ons". This
happens when the owner or others continuously require small changes that will
improve the project outcome, whether a product or service. These changes
represent "extras" perceived as being part of the original project intent. (Project
management, the managerial process. By Clifford F. Gray)
I can only assume that the owner would drag out the close-out process the
most, mainly due to the fact that the owner would typically want to ensure that
all of the aspects written within the contract are met before everything is said
and done. Rushing this particular process could be potentially detrimental to the
owner, especially if some of the aspects of the contract are met and the
contracts an overall criterion wasnt met fully.

I would think the client would be more likely to take longer to close out the
project. Once the client signs off that all work is completed; any problems that
might have been over looked might be additional charges to get fixed. Also
when the work is completed the final payment would be due and the client will
have to write a check to the owner.
Another problem that often arises is that the Project Manager is
assigned to a new project/contract during the close-out phase, and
naturally he/she becomes more preoccupied with the new assignment.
Have you heard the term "Close-out Managers" in any of your PM
courses? If yes, what do you recall is the role of these managers? If you
have not heard the term before, what do you think it refers to?

I have not heard of this term in my other PM course. However, this person is hire
to make sure that the project is close-out correctly. The Close-out Manager make
sure that all the T's are cross and all I's are dotted and to make sure the
documents are completed. They also make sure that the best practices and
areas of opportunities are document.
I have not heard of the Close out Manager term before. I think the Close out
Manager is the person who make sure the project goal is met an it is ready to be
given to the customer. The PM is ready to move forward to another project but
need to make sure that the project is completed before they do.
The close out manager has all responsibility to wrap up the project and
finalize the paperwork. With a new project beginning, the PM is tied up
in scheduling and making it start smoothly that he/she doesn't have
time to return to the other project to complete everything. PM has to be
onsite at all times from the start of a project to basically the completion
of work so that there isn't time to be running back and forth, especially
at the beginning of a new project which is very important to set the
tone and schedule from the start. The completion phase is more
attuned to administration. A close-out manager is assigned to project
at the close-out phase. He/she only focus and concentrate on the task
of that particular contract close-out. He/she would only be limited to
that purpose.

Project closure is the last phase of the project management process. Upon the
end of implementation phase, preliminary acceptance of the project result is
accomplished; yet minor items may still be open, summarized on a list of open
points
http://www.project-management-knowhow.com/project_closure.html

What i think it refers to is the handing off of the project to the department or to
the manager of who the project was for. It is the testing phase making sure we
are a go no go.
I have not heard of this term. Where I work the project manager or account rep is
responsible for the closing of the job. This includes getting paid and finishing any
punch list items that may still be open. Because there is usually some type of
retainage in the contract, usually 10% it can be difficult to collect sometimes.
The job would still be closed as the money would then be moved to bad debt and
then if collected later would fall to the profit line.
I haven't heard the term either. But, if it is project manager then his
responsibilities and task during the close-out phase would include:
- Ensure that all project deliverables have been completed and formally accepted
by the customer.
- Determine if the measurable success indicators were achieved.
- Conduct project close-out meetings, both internal and external.
- Write the final project report.
- Document and share lessons learned.

Some of the activities that need to be performed as part of the contract closeout
functions are; products and services are provided to the buyer, documents show
receipt and acceptance of all the contract items, there are no pending
investigations or claims, all contract issues have been settled, a termination has
been completed if needed, contract audits are complete, and final invoice has
been submitted and paid.
Some of the factors tat cause a length in delay in the closure of the
project/contract are same as above, for example; final invoice has not been
submitted or paid, there are investigation or contract issues that have not been
resolved, final funds have not been received, etc.
In my experience, there is usually another reason behind the delaying of final
payment. Such as outstanding obligations, unsatisfactory deliverables or petty
disputes between seller and buyer. There are many factors that cause a delay in
the contract closeout and the contract is usually considered closed after the final
payment is made as not many buyers will fork over all the money until they are
satisfied with contractual deliverables.
I think that the initial problem with contract close out is that both parties want to
make sure that they have all that they need in order to bhe satisfied. It is kind of
like saying goodbye to yoru girlfriend at the end of the night. Neither party want
to walk away.

What is a close-out function or responsibility (i.e., something that

needs to get done) that is often overlooked or forgotten?
I think one of the most important close-out functions or responsibility that may
be overlooked is the Lesson Learned document. This is an important document
that may be very helpful in contracts to come. Every contract must have had
some learning curve, so it is important to document success as well as failure.
Per our notes "Once a contract comes to an end, it is important for the project
manager and contract adminstrator to close out the project". which is why a
close-out manager is hired in order to "make sure all of the Ts are corssed and Is
are dotted"
also per out notes a procurement audit should be done as well as it is to
complete the contract file.