Construction Project Closeout

Everyone's favourite part of the project.

We’ve all been there, stuck on that job that everyone has left, construction project closeout is not fun, but it’s a necessary evil of every project. Depending on what type of project you are on, project closeout will look different, but depending overall there should be three main areas you need to be focusing on:

  • Turnover and Permit Closeout
  • Quality and Issue Closeout
  • Financial Closeout
  • Warranty Period

Focusing on these areas won’t necessarily guarantee a successful closeout but will put you on the right track.

Construction Turnover and Permit Closeout

Construction Turnover, Occupancy, Substantial Performance (incase you’re not sure what each of these are we’ve added them to the glossary). Project turnover and can be a confusing process but there are a few main procedures to follow.

Project occupancy means that people can begin using the building. In order to get occupancy you need a number of documents from your consultants and various agencies but ultimately it’s the building inspector who grants occupancy. Some of the documents they will be looking for include:

  • Letters from each of the consultants confirming that the project is built to drawings and specs
  • Letters from fire alarm vendor
  • Letters from Electrical Safety Association in your area
  • Documentation on flame spread rating and firestopping / fireproofing material
  • Signoff from third party inspectors
  • Sign off from elevator inspectors

There are many different documents which can affect occupancy – your best bet is to discuss these with your building inspector well in advance of the date of turnover.

The Day of Construction Turnover

On the day of turnover, ensure that all of your consultant walkthroughs have been completed, that your life safety systems are commissioned and all of your fire seperations are completed. Exits need to be in conformance with the building code.

Construction turnover should never be a surprise, regular walks with your building inspector in advance of the date should set the expectation in addvance for what the building will look like come the big day.

Post Construction Occupancy

Once you have occupancy, there will likely be a list of items the building inspector wanted complete or that were deficient. Getting these items completed so the building inspector can close your permit. Getting these items completed in a timely manner can help to avoid complications with operation of the building in the future.

To help manage these issues create a master list of all of your deficiencies, highlight these as a critical item and assign them to yourself.

construction project closeout

Quality and Issue Management (Construction Deficiencies)

Alot of owners have high quality expectations and as part of your business model you need to deliver. If the contract documents and your budget don’t reflect the quality that you think your owner will be expecting you need to level with them up front and discuss with them the requirements to deliver that level of quality.

As you near the end of the project it’s time to start implementing your deficiency process. Start this process several months in advance of the turnover date.

We’ve already written a really great article on quality and how to manage the deficiency process in construction so check it out here.

The most important part about issue closeout is that you don’t let things linger. The longer issues sit outstanding the harder they can be to resolve.

Financial Construction Closeout

There’s a part in every project manager’s project where they start to get nervous about over running the budget. Alot of times that nervousness comes in the last few months of the project when they start reconciling all of the trade values.

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Typically on projects I like to start this process a few months before turnover. There are a few good practices to start with:

  • Send an email all trades requesting any outstanding quotations by a certain date. If they fail to submit them by that date indicate that they will not be accepted. This way you put the trades on notice to ensure all quotations are submitted.
  • Request quote logs from each of the trades – this way you can be sure that the ones you have match their list and there are no surprises down the road on a quote you may have overlooked in your inbox.
  • Review your change notice log for completeness. Ensure all quotations are submitted to the owner well in advance of the project completion date.

Substantial Performance on Construction Projects

There’s a requirement in most contract types to apply for subtantial performance. Essentially substantial performance is a mathematical calculation that if granted begins the 45 day holdback period. Check with your local construction association or architectural assosication for the guidelines in your area.

  • The submission typically involves identifying a few items:
  • Amount billed to date
  • Value of work outstanding
  • Value of deferred work (work that was delayed by the owner and agreed not to be included in the initial turnover date)
  • Value of deficiencies

Assuming the amount of outstanding and deficient work falls within a value as dictated by the calculation you’ll be granted substantial performance on your construction project. Once granted it’s your responsibility to send it to your local construction association for publication. This will notify subcontractors on your project and begin the lein period.

A lein can be applied at any point on your project, however after the 45 day hold back period expires the project can no longer have one applied to it that would otherwise affect occupancy of the project.

The Construction Warranty Period

You’ve turned over the building and achieved substantial performance but the job isn’t over yet. Many contracts have a warranty period. One year is typical for the industry but your contract may stipulate longer periods. During this period you and your subcontracts are responsible for fixing defects that arise in the workmanship for the project.

It should be made clear to your owner that the warranties don’t cover damage or improper use of equipement. In order to protect yourself we recommend issuing a letter to your owner and architect outlining the procedures for warranty claims and what is covered.

During this time it’s important to keep a log of warranty issues. This was if the same issue reoccurs you can identify it more easily and keep track of problem trades.

People’s time can be valuable and sometime this task get’s assigned to people on new projects. If you are the owner of your business it may be worth hiring someone dedicated to resolving warranty issues on other projects.

Construction Closeout Done Better

Construction closeout will be the last experience your owner has of you, and doing it poorly can mean a loss in return business.

Spend the time to do construction closeout right, be diligent and follow up regularly on outstanding items. Doing these things will help to turnover and deliver a strong finished product.

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