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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. he 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. !hat are some of
the activities that need to be performed as part of the contract closeout
functions" !hat 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 verifcation 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 reuired on the pro!ect. "he delay could
happen because of the change reuest raised during the contract e#ceution,
issues in the pro!ect, back orders or missing materials, poor management etc.
$ou 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 pro!ect. "hat means submitting on everything you needed to submit
on, buying the !ob completely out and performing all the work.
As the buyer you need to make sure all parts of the contract have been fulflled
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.
%ne will think that closeouts should be the easiest part in the contract because
it is when acuaintances have been made and everybody is !ust happy to end
this long, e#ultant, but sometime treacherous !ourney. &owever, specifcations,
payroll, over-allocation, bonuses, legal issues, along with training could all cost a
lengthy closure.
"he activities that are needed to preform contract closeouts are meetings,
updated fnancial statements, clear and close communication, setting a close
date, verifying that all deliverables are accepted, and updating records to re'ect
fnal results.
"he pro!ect needs to be evaluated to ensure that all the milestones have been
met and that the pro!ect meets all specifcations. "he pro!ect should be
evaluated and any failures or issues carefully looked at to see how they can be
prevented or mitigated in future pro!ects.
"he pro!ect should have met all specifcations and drawings to the current date.
(verything should have been submitted on and approved before installed.
%ne of the main processes of a contract closeout would be a thorough
inspection and review of the pro!ects deliverables. "he end results of the pro!ects
must be e#amined to ensure whether or not they meet the e#pectations of the
stakeholders. )y 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.
)y not performing this review, the buyer is taking risks of paying for sub-par or
une#ceptable work. *n-turn, stakeholders will not be satisfed and the pro!ect will
be viewed as a failure. +recious resources would have been wasted on the part of
the buyer and a new contract with a new vendor, e#tended deadlines and
increased budget will have to be determined.
"o close-out a pro!ect successfully, all of the parts have to come together and like
building an entertainment stand that comes in a bo#, there are a lot of little
pieces. "he hardest part during is keeping everything organi,ed. "he 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- *f the pro!ect was properly
maintained, then pieces should all meet up at the end, .should. being the key
word. )alancing the
/eeping up with the pro!ect schedule with prepare you for the pro!ect closeout.
*f you submit on material and euipment as scheduled and perform the work
according to the pro!ect schedule, you
* agree with you and * like how you compared it to an entertainment stand. "his
is true to all pro!ects, you can buy cheap, industry standard, and high cost parts.
%ne thing that could become an issue with closing out a pro!ect, is that all 01*'s
are answered for pro!ect completion. 2hich in the case of the entertainment
stand, do * need another pieces to make it stronger, last longer, or am * missing a
piece. "his could cause the pro!ect to prolong longer than it should.
Closeout is completed when all administrative actions have been
completed# all disputes settled# and $nal payment has been made.
&ere is a list of actions to accomplish to close a contract as they are applicable3
0eview contract data and confrm all deliveries accepted
*dentify and 4eobligate (#cess 1unds
Complete any price revisions
(nsure all subcontracts are settled by the prime contractor
*ndirect costs are settled
5o outstanding value engineering change proposals 67(C+8
1inal patent report is cleared
1inal royalty report is cleared
"ermination docket is completed
Contractor9s fnal closing statement is completed
Contractor9s fnal invoice has been submitted
Contract audit is completed
4eobligate funds3 4eobligation of e#cess funds is one of the contract
administration functions normally delegated to the Administrative Contracting
%:ce at the Contract ;anagement %:ce
!ho do you think typically drags out the close-out process# the owner
or the vendor" %upport your answer.
* think it would be the lack of e<ort from a certain party by not getting all
contracts sign closed out or vendors agreeing to time constraints deliveries and
etc... )oth parties should have an urgency to get the !ob done and have all *'s are
crossed and the "'s are dotted
*n 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. "here are various activities that customers/owners would
want to be completed before the contract close out occur. e.g. =nloading of
production and test databases, 0eturn of customer euipment, 0eturn of
customer software or tools/data, Copies of all methodologies or technology used
to provide the services. %wner 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 pro!ect issues at a later point of time.
&t is usually the owner not wanting to sign o' on the $nal product. he
vendor is usually motivated by wanting that last payment(
"he delay has something to do with the contract closeout activities, such as the
procurement audits and the performance measures. "herefore, the delay is on
the owner making sure that everything involving the contract has been
processed and closed before notifying the vendor that the pro!ect is
Another reason for delays in closing a pro!ect is due to constants .add-ons.. "his
happens when the owner or others continuously reuire small changes that will
improve the pro!ect outcome, whether a product or service. "hese changes
represent .e#tras. perceived as being part of the original pro!ect intent. 6+ro!ect
management, the managerial process. )y Cli<ord 1. >ray8
* 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. 0ushing 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 wasn9t met fully.
* would think the client would be more likely to take longer to close out the
pro!ect. %nce the client signs o< that all work is completed? any problems that
might have been over looked might be additional charges to get f#ed. Also
when the work is completed the fnal payment would be due and the client will
have to write a check to the owner.
)nother problem that often arises is that the *roject +anager is
assigned to a new project/contract during the close-out phase# and
naturally he/she becomes more preoccupied with the new assignment.
,ave you heard the term -Close-out +anagers- in any of your *+
courses" &f yes# what do you recall is the role of these managers" &f you
have not heard the term before# what do you think it refers to"
* have not heard of this term in my other +; course. &owever, this person is hire
to make sure that the pro!ect is close-out correctly. "he Close-out ;anager make
sure that all the "'s are cross and all *'s are dotted and to make sure the
documents are completed. "hey also make sure that the best practices and
areas of opportunities are document.
* have not heard of the Close out ;anager term before. * think the Close out
;anager is the person who make sure the pro!ect goal is met an it is ready to be
given to the customer. "he +; is ready to move forward to another pro!ect but
need to make sure that the pro!ect is completed before they do.
he close out manager has all responsibility to wrap up the project and
$nali.e the paperwork. !ith a new project beginning# the *+ 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. *+ 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. he completion phase is more
attuned to administration. ) close-out manager is assigned to project
at the close-out phase. ,e/she only focus and concentrate on the task
of that particular contract close-out. ,e/she would only be limited to
that purpose.
+ro!ect closure is the last phase of the pro!ect management process. =pon the
end of implementation phase, preliminary acceptance of the pro!ect result is
accomplished? yet minor items may still be open, summari,ed on a list of open
points
http3//www.pro!ect-management-knowhow.com/pro!ect@closure.html
2hat i think it refers to is the handing o< of the pro!ect to the department or to
the manager of who the pro!ect was for. *t is the testing phase making sure we
are a go no go.
* have not heard of this term. 2here * work the pro!ect manager or account rep is
responsible for the closing of the !ob. "his includes getting paid and fnishing any
punch list items that may still be open. )ecause there is usually some type of
retainage in the contract, usually ABC it can be di:cult to collect sometimes.
"he !ob would still be closed as the money would then be moved to bad debt and
then if collected later would fall to the proft line.
* haven't heard the term either. )ut, if it is pro!ect manager then his
responsibilities and task during the close-out phase would include3
- (nsure that all pro!ect deliverables have been completed and formally accepted
by the customer.
- 4etermine if the measurable success indicators were achieved.
- Conduct pro!ect close-out meetings, both internal and e#ternal.
- 2rite the fnal pro!ect report.
- 4ocument and share lessons learned.
Dome 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 fnal invoice has
been submitted and paid.
Dome of the factors tat cause a length in delay in the closure of the
pro!ect/contract are same as above, for e#ample? fnal invoice has not been
submitted or paid, there are investigation or contract issues that have not been
resolved, fnal funds have not been received, etc.
*n my e#perience, there is usually another reason behind the delaying of fnal
payment. Duch as outstanding obligations, unsatisfactory deliverables or petty
disputes between seller and buyer. "here are many factors that cause a delay in
the contract closeout and the contract is usually considered closed after the fnal
payment is made as not many buyers will fork over all the money until they are
satisfed with contractual deliverables.
* 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 satisfed. *t is kind of
like saying goodbye to yoru girlfriend at the end of the night. 5either party want
to walk away.
!hat is a close-out function or responsibility (i.e.# something that
needs to get done) that is often overlooked or forgotten"
* think one of the most important close-out functions or responsibility that may
be overlooked is the Eesson Eearned document. "his is an important document
that may be very helpful in contracts to come. (very contract must have had
some learning curve, so it is important to document success as well as failure.
+er our notes .%nce a contract comes to an end, it is important for the pro!ect
manager and contract adminstrator to close out the pro!ect.. which is why a
close-out manager is hired in order to .make sure all of the "s are corssed and *s
are dotted.
also per out notes a procurement audit should be done as well as it is to
complete the contract fle.

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