National Academies Press: OpenBook
« Previous: Chapter 1 - Introduction
Page 8
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 8
Page 9
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 9
Page 10
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 10
Page 11
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 11
Page 12
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 12
Page 13
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 13
Page 14
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 14
Page 15
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 15
Page 16
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 16
Page 17
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 17
Page 18
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 18
Page 19
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 19
Page 20
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 20
Page 21
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 21
Page 22
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 22
Page 23
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 23
Page 24
Suggested Citation:"Chapter 2 - Literature Review." National Academies of Sciences, Engineering, and Medicine. 2021. Practices for Closing Out Highway Projects from Substantial Completion to Final Payment. Washington, DC: The National Academies Press. doi: 10.17226/26304.
×
Page 24

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

8 Introduction This chapter summarizes information collected from relevant literature for project closeout of highway construction projects. The objective of this chapter is to set the background and context for the findings from the survey and case examples presented in Chapters 3 and 4, respectively. Based on the literature review search conducted, limited research into project closeout for trans- portation highway projects exists. The studies found are included in this chapter, and literature information is provided from FHWA project closeout reports and documents, as well as state DOT construction manuals and project closeout manuals and reports. Project closeout involves completing many tasks, including turning over the project to the state DOT and moving the facility into operations; redistributing resources, staff, and equip- ment; closing out financial accounts; completing, collecting, and archiving project documents and records; documenting lessons learned; and planning for a post-implementation review (Parker et al. 2005). Highlighting the project closeout phase of a project is important, as the primary purposes of project closeout include transferring costs to appropriate financial accounts, re-programming of any excess funds, tracking of all post-construction completion activities and any associated decisions that were made, and providing a project record as a basis for judicial review and community relations (Wooldridge et al. 2001). The sections below outline the components of project closeout, including the project closeout duration, the required closeout documents needed, project closeout delays and the implications of not closing out a project in a timely manner, and the practices used by state DOTs to closeout a project. In addition, the federal project closeout process is discussed, including the FHWA Fiscal Management Information System (FMIS), the FHWA Financial Integrity Review and Evaluation (FIRE) program, and the FHWA project inactive list. Duration to Close Out a Project Determining project time is not an easy task, which affects the project management of a project as well as the time allotted for closing out a project. Closing out a highway construction project requires finishing the construction work, gaining acceptance of such work, and finalizing the financial obligations and accounts of the project. Many various steps and checklists are used to complete the closeout process, and many different documents, reports, and certifications are required before the project is truly closed. With all these steps and the many documents needed, the closeout process can take time. However, state DOTs have set goals on the duration to close out the construction phase of the work and then proceed to closing out the financial portion of the project. These goals are set to encourage that most if not all highway construction projects are completed and closed out in a timely fashion. Table 2 shows the project closeout C H A P T E R 2 Literature Review

Literature Review 9   duration goals along with the project closeout time period for different state DOTs collected from project closeout documentation, construction manuals, and administration operation reports. As shown, the durations to close out a project vary from DOT to DOT, as the definition for the time period of project closeout varies across state DOTs. Documentation for Closeout One of the most important documents for project closeout is the final package that docu- ments the construction closeout process and contains the required information and documents so that a DOT can sign off on final acceptance of the construction work. The final package, in many cases, needs to be comprehensive and complete before a DOT will review and approve final acceptance. Once the final package is completed, reviewed, and accepted, the DOT then moves to close out the financial portion of a highway project. Therefore, the final package is typi- cally the main component to construction closeout that signals the financial side to begin closing out the funding accounts and moving towards final payments and complete close of a project. From the literature collected on DOT project closeout, Table 3 lists project closeout documents required for a final package from different DOTs. The state DOTs listed show that as-built drawings, Disadvantaged Business Enterprise (DBE) reports, final voucher, final acceptance documents, final estimate, and material certifications are the most common project closeout documents required by state DOTs for their final packages. The federal aid system for projects using funds from the FHWA requires a specific process and associated documents to properly close out a project. In addition, archiving of project docu- ments is also a part of the project closeout process as DOTs maintain records for potential audits after the project is closed. For projects using federal aid, there are certain requirements for the archiving of project closeout documents (FHWA 2018). Table 4 outlines the documents and the time period that the FHWA requires a DOT to retain project closeout documents in an archive. Note that state requirements might be different, depending on the rules and regulations set by the state legislature. As-built drawings are an important part in the project closeout documentation process. Most DOTs require submission and approval of as-built drawings before delivering the final payment, and DOTs then retain an up-to-date set of as-built plans at the district or central offices for future purposes. The Connecticut DOT makes the contractor responsible for updating the as-built State DOT Project Closeout Duration Goal Indiana Project closeout must not exceed 180 days from final acceptance to final payment (Indiana DOT 2016). Kentucky 240 Days: 90 days from substantial completion to acceptance; 90 days from acceptance to final release; 60 days from final release to contract items complete (Johnson et al. 2017). Nebraska 60 Days: from tentative acceptance date to make final payments to contractors (Nebraska DOT 2017). New Hampshire Project closeout should not exceed a timeline greater than 360 days upon receipt of the final deliverables (New Hampshire DOT 2016). Ohio Six months to final acceptance and final payment from completion of work for 90% of projects (Ohio DOT 2017). Pennsylvania Three months – From the date of submission of the final invoice, the contractor’s payments must be made and attain complete project closeout status (Pennsylvania DOT 2020). Utah 260 Days: 140 days from substantial completion to final acceptance; 120 days from final acceptance to final payment (Utah DOT 2013). Virginia No more than 90 days from final acceptance to final payment (Virginia DOT 2016). Table 2. State DOT project closeout duration goals.

10 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment plans and submitting a “red-lined” set before project closeout (Connecticut DOT 2020a). The Alaska DOT requires the project staff to update as-built drawings during construction to ensure accurate as-built drawings by the time of project completion. Alaska DOT also requires the contractor to update the estimated quantities on the as-built drawings after providing final approval of quantities (Alaska DOT 2017). The Colorado DOT calls them as constructed plans and requires them to be updated using electronic software programs (Colorado DOT 2018). The Virginia DOT compares as-built drawings to the final summaries and makes required changes (Virginia DOT 2016). Despite the importance of as-builts, obtaining and storing as-built drawings has proved challenging to DOTs. NCHRP Synthesis 548 examined the development and use of as-built plans and collected survey data from 42 DOTs (Taylor et al. 2020). Of the survey respondents, 86% indicated that handwritten notes are the most commonly used method to capture as-built data, and the adoption of other forms of as-built capture has been slow (Taylor et al. 2020). This form of data capture can make it difficult for as-built requirements related to project closeout to be completed. DOTs identified this challenge, as 94% of respondents cited that improve- ments in as-built data capture methods were needed to advance their as-built process (Taylor et al. 2020). Final Package Documents A la sk a C ol or ad o C on ne ct ic ut F lo ri da G eo rg ia N ew H am ps hi re N ew J er se y N or th D ak ot a P en ns yl va ni a T ex as U ta h W yo m in g As-built drawings Certificates of Compliance Construction report/narrative Contract status report Contractor affidavit/surety consent Contractor’s acceptance of final estimate/quantities DBE report Disputes/claims report/information Environmental commitments/compliance information Final acceptance documents Final estimate/quantities Final inspection report Final invoice Final voucher Material certifications/information Overruns/underruns report Project permits Punch list completion report Quality survey for design items ROW reports Utilities/railroad closeout information Table 3. Final package documents for closing out construction.

Literature Review 11   Project Closeout Delays and Implications When a project experiences delays in the closeout process, these delays hamper completion of the construction work and contract administration tasks as well as closing financial accounts and making and receiving final payments. Previous research in transportation project closeout reveals that delays in project closeout are typically attributed to claims, dispute resolution, and cost overruns (Parker et al. 2005). Some of the more significant reasons for project closeout delays are summarized in Table 5. Additionally, Kaul (2014) identified four major factors affecting the closeout process, which are psychological, financial, technical, and administrative. Table 6 outlines the types of delays that are associated with these four factors that impact project closeout. Of the factors and reasons listed in Table 5 and Table 6, state DOTs focus on these closeout delay factors prior to construc- tion of a project so that the delays are alleviated long before the project gets to the closeout phase. When the project closeout process is delayed, the delays have lasting implications such as the inability to close financial accounts and reconcile project funds, whether there is an excess or a shortage, which creates a burden on the state DOT in their efforts to efficiently use available Documents Retention after final payment FMIS project agreement/modifications 3 years Plans, specifications, and estimate (PS&E) 3 years Bid/award documentation 3 years Revisions/change orders 3 years Invoices and billing support documentation 3 years As-built plans 3 years for federal purposes; recommend indefinite archive of as-built documents Materials records and certifications 3 years Field books/diaries 3 years Documentation for construction engineering costs 3 years Force account documentation 3 years Utility/railroad agreements 3 years Environmental permits 3 years Alternative contracting method approval/public interest finding/SEP-14 or SEP-15 approvals 3 years Right-of-way clearance 3 years Final acceptance checklist/supporting documentation/contractor release 3 years Final estimate voucher/invoice 3 years Final acceptance of ITS/technology related elements 3 years Verify completion and/or status of environmental commitments 3 years Warranty documentation 3 years or to end of warranty period, whichever is later Final Inspection and Acceptance Report 1446 3 years Documentation from earlier phases that supports construction cost eligibility/PS&E approval 3 years Audits (may occur after project close) 3 years or after audit is closed and finding resolved, whichever is later Documentation of litigation or claims 3 years or after any claim or litigation is closed and finding resolved, whichever is later Source: FHWA 2018. Table 4. Project closeout documents needed for federal aid projects and the retention period.

12 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Limited leadership of the project team Barriers in the flow of communication Financial Owner directed change order Delay by owner for payment of work before substantial completion Contractor penalties for delayed project completion Technical Technical expertise LEED/commissioning requirements (certification) Lack of planning and resource allocation Unclear directives for closeout in specifications and contract Accidents to people/equipment after substantial completion or acceptance Procedural inexperience of owner representative or design team Administrative Improper/untimely contractual closeout documentation Subcontract closeout requirements Multiple punch lists Shortage/late arrivals of resources State and municipal regulatory requirements Federal regulatory requirements Source: Kaul 2014. Factor Type Psychological Project manager or superintendent demobilized before final completion Stress of learning new technology/processes due to labor shortages Lack of urgency in the approach, enthusiasm, and motivation of parties involved due to achieving substantial completion Demotivation of team members losing coworkers due to downsizing or moving of labor Table 6. Factors affecting closeout and types of impacts. Project Closeout Delays Absence of responsiveness and responsibility from the contractor Adversarial relationships between the owner and contractor Completing punch lists in occupied spaces Contractor goes out of business/defaults Contractor is slow in submitting required closeout documentation Contractor or state DOT staff transferring to another project or leaving the company Delayed payment by the owner Excessive or multiple punch lists Issuing substantial completion or acceptance for partially completed projects Lack of a contractually agreed dispute resolution method Lack of preparedness and planning by the contractor for project closeout Lack of proper closeout processes Lack of surety consent Liens and stop work orders No incentive for timely closeout Unachievable project closeout period Unclear contractual project closeout requirements Unresolved claims and disputes Using part of a project before total completion of the project occurs Source: Johnson et al. 2017, Parker et al. 2005. Table 5. Reasons for project closeout delays.

Literature Review 13   resources and staff (Parker et al. 2005). Delays also affect the contractor, as final payments may take longer than expected, which impacts the contractor’s bonding capacity and sometimes leads to claims and litigation, further delaying the closeout as projects typically cannot be closed with the presence of unresolved claims (Wooldridge et al. 2001). In addition, to quan- titatively understand the implications of project closeout delays, the study by Johnson et al. (2017) quantified closeout delays. The research team analyzed closeout data from the Kentucky Transportation Cabinet (KYTC) for the years 2016–2017. Based on the analysis, the team esti- mated that reducing closeout delays to zero across KYTC would result in a reduction of enough encumbered funds (i.e., funds held due to delayed closeout) to pave an additional 2,000–7,000 of lane miles. To alleviate project closeout delays and gain the potential quantitative value of reducing project closeout delays, previous research identified techniques that help owners and state DOTs reduce the possibility of project closeout delays. Table 7 summarizes ways for DOTs to consider reducing or eliminating project closeout delay factors. Project Closeout Processes and Practices The project closeout process involves completion of the field construction work, collection and review of construction related documents and information associated with closeout to check for accuracy and gain approvals, and finalization of funding accounts and making final payments to the contractor and receiving final payment from FHWA for projects, including federal aid. It is important to note that state DOTs use different processes and associated terminology to define the steps and milestones to finalize a project. As an example, the Florida and California DOTs use acceptance as signifying the start of the project closeout process, whereas the Connecticut and Utah DOTs use substantial completion marking the formal start of project closeout, and these DOTs also include acceptance in the closeout process once all corrective DOT Project Closeout Techniques Establish a task force to conduct a high-level analysis of the project closeout process. Implement e-Construction methodologies to reduce paperwork and centralize recordkeeping within tightly controlled and monitored databases. Integrate project closeout procedure into contracts. Investigate ways to improve the preparation of final documentation. Optimize project closeout processes at the district level to help personnel adopt best practices. Organize required project information and documentation from the beginning of a project and throughout the construction phase. Reduce the amount of time allocated for the development and completion of materials check. Revise project closeout checklists to standardize the process and eliminate steps that are unneeded or outdated. Take care in projects that are partially opened for the benefit of the traveling public so that the remaining portions are completed successfully and timely. General Project Closeout Techniques Use of early completion incentives or late completion penalties. Use of specialized project closeout staff. Include project closeout activities and milestones in the construction schedule. Award the certificate of substantial completion only to projects where the construction is complete. Improve owner-contractor relationships. Set goals for a project closeout timeline. Identify closeout activities that can occur simultaneously. Invoke a team effort with active communication along with having proper leadership from the management team. Reduce or eliminate the downsizing of project staff before the project is completely closed out. Source: Johnson et al. 2017, Kaul 2014, Rogers 2012, Parker et al. 2005. Table 7. Techniques for reducing or eliminating project closeout delays.

14 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment work has been completed. Furthermore, the Ohio DOT uses physical work complete to denote substantial completion and that the project is ready to begin being closed. Although these state DOTs are similar in their project closeout processes, one needs to be aware of the different terminology used by state DOTs in terms of project closeout. A glossary of project closeout process terms and definitions is provided at the end of this report. The information below describes the FHWA highway closeout process and review of federal aid projects along with sample DOT project closeout processes, as described by finalization and project closeout documents and manuals collected from state DOTs. FHWA Closeout Process The closeout process instilled by the FHWA for state DOT highway projects that utilize federal aid follows the step outlined in Figure 1. The closeout process includes first, that the contracted construction work is complete; second, that the work is completed in an acceptable manner; third, that the FHWA accepts and approves the final voucher; and fourth, that state DOTs retain project closeout documentation records for a set amount of time, which was also described in Table 4. Many state DOTs use this closeout process as a guideline for their own closeout processes. A project is considered ready for closing when the physical construction-contracted work is complete and the state DOT has completed all expenditures related to construction engineering activities. Once the state DOT accepts the work based on determining that all required construc- tion work and all applicable administrative processes for the project have been completed, they State Record Retention The State DOT retains/is required project documentation for the Stated amount of time from the FHWA. FHWA Acceptance and Approval of Final Voucher The State DOT submits a final voucher for approval stating that project meets all requirements prior to closing out the project agreement. The FHWA performs oversight tasks to approve and close the project. State Project Acceptance The State DOT confirms project meets State and Federal requirements by performing final inspections, reviewing project records, and determining there are no outstanding claims, uncompleted work, or other contract issues. Project Completion Contractor informs DOT that construction is physically complete. Figure 1. Project closeout process for state DOTs (adapted from FHWA 2012).

Literature Review 15   proceed with final billing and final documentation of the project and submit a request to FHWA to close the project. The request to close a project to the FHWA must occur within 90 days of the project agreement end date. Coordination efforts between the FHWA Division Offices and the state DOTs to close out the project once the closeout notification is submitted help ensure that state DOT projects using federal aid do not linger as open and become inactive. All final costs must be billed, all obli- gations expended must be recorded and reconciled, unexpended funds are de-obligated, and final documentation must be completed within 90 days of the project end date unless the state DOT requests an extension for an additional 90 days. Then, the Fiscal Management Informa- tion System (FMIS) is the FHWA’s major financial information system for tracking federal aid highway projects on a project-by-project basis. In order to achieve project closeout status for federally funded projects, they must be closed in FMIS. Projects are closed in FMIS once final documentation has been submitted that supports project costs and complies with state and federal requirements. The closeout process ensures that all costs incurred are reimbursed from federal aid, and all documents and milestone reports are submitted. FHWA Financial Integrity Review and Evaluation and the Inactive List The U.S. Congress authorizes federal aid funding for performing construction, reconstruc- tion, and improvements of highways and bridges. For review in the use of federal funds, the FHWA has the Financial Integrity Review and Evaluation (FIRE) program, which is a risk-based financial management oversight program that the federal aid office is required to execute. The purpose of FIRE is the financial management review that evaluates the state process or system for managing federal aid funding, including funds management, federal aid billing, major projects, project authorization, modification, voucher, and locally administered projects. Because FIRE involves reviewing the management and billing of funds, project closeout is related. A portion of the FIRE program reviews inactive projects to ensure that federal funds are properly obligated, federal funds are being used effectively, and any unused funds are properly safeguarded or de-obligated to minimize misuse. Inactive projects are those that have not had any expenditures charged against federal funds for the past 12 months. The FHWA inactive projects list includes the state DOT projects that use federal funding but have not been closed out, and therefore, it can be perceived that the funds are not being used as obligated properly. Projects from DOTs that end up on the inactive list are in jeopardy of having their funds de-obligated if a FIRE review deems that the project is not using funds properly (FHWA 2014). De-obligation of funds creates issues on how to charge any final costs to project accounts that no longer have funds. Departments of transportation are aware of the inactive list and work to avoid having projects end up on the inactive list, and if a project does, they do their due diligence to get the project closed and removed from the list. Nebraska Department of Transportation The Nebraska DOT designed their final review process to close out construction projects within 60 calendar days of the tentative completion date, to resolve any remaining disputes and deficiencies, and to eliminate any potential interest payments that might accrue due to late payment. Upon completion of the project, the contractor notifies the project manager. The project manager inspects the work to determine whether it is in compliance with contract requirements. If the work complies with the contract requirement, the project manager will submit a notification of completion and a letter of project completion to the district engineer. The district engineer, upon receiving this, will submit a letter of tentative final acceptance, accepting all items of the contract work. After this, a notification of contract completion (DR-91) will be prepared and submitted (Nebraska DOT 2019).

16 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment If the project manager determines that corrective work is needed, the contractor will be advised to perform required corrective work. The corrective work performed is documented, and upon satisfactory completion, the notification of completion and letter of project comple- tion will be submitted to district engineer. The district engineer will submit a letter of tentative final acceptance and notification of contract completion (DR-91) to all appropriate recipients. Upon receipt of letter of tentative acceptance from the district engineer, the Lincoln Construc- tion Division – Final Review Section will make sure all of the required documentation and records are in place to release final estimate to the controller division (Nebraska DOT 2017). The controller division then makes the final payment to the contractor and reconciles all accounts to be closed out. Figure 2 shows the Nebraska DOT final review process for project closeout. New Jersey Department of Transportation The New Jersey Department of Transportation (New Jersey DOT) follows a five-stage project closeout process shown in Figure  3. The project closeout process includes the Division of Construction and Materials, the Bureau of Program Coordination, the Division of Accounting and Auditing, the Division of Project Management, and the FHWA when using federal funding for a project (New Jersey DOT 2018). For each highway construction project, the region engineer (RE) must maintain a project closeout workbook (form DC-155), which contains the project closeout milestones and timeline shown in Table 8. The workbook identifies the necessary tasks required to close a project and the RE tracks and monitors the tasks so that project closeout occurs in a timely manner (New Jersey DOT 2016). Upon reaching substantial completion, the contractor notifies the department in writing. The RE for the project reviews and inspects the project along with the field manager (FM) and FHWA area engineer to determine whether the contractor has reached substantial comple- tion. After it is determined that the work is substantially complete, a corrective action inspec- tion (CAI) takes place, and the RE provides a compiled list of corrective action items to the contractor. Completion of corrective work triggers the RE to issue a memorandum of record (Form DC-155, C63C) and requests the regional office to initiate certificate of completion (Form DC-20) (New Jersey DOT 2017). The Division of Accounting and Auditing checks the status of project accounts in FMIS, and the status memorandum, acceptance and final payment form, fund adjustment form, and the department’s acceptance package (DAP) are prepared. The RE develops a final estimate with review and by accounting. The region office approves the final estimate after processing and executing the DAP. The regional construction engineer submits a federal closeout package (FCP) to the FHWA as the final voucher to close out the federal fund accounts. The FCP is forwarded to Director of Construction and Materials for processing, approval, and final contractor payment (New Jersey DOT 2017). Utah Department of Transportation The Utah Department of Transportation (Utah DOT) post-construction phase, which captures the project closeout process, begins with the notice of substantial completion, followed by the final inspection and acceptance by Utah DOT, and is completed with the issuance of the construction final letter to the contractor. The final inspection is conducted with the project manager (PM), the resident engineer (RE), and all relevant project stakeholders, and any correc- tive work required is to be repaired and resolved immediately. After completing corrective work, the contractor is to provide all necessary project documentation for closeout, which a region contract specialist (RCS) then reviews. After review, Central Construction issues the construc- tion final letter (Utah DOT 2013).

Figure 2. Nebraska DOT final review process flowchart (2017).

18 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Figure 3. New Jersey DOT five-stage project closeout process (2016).

Literature Review 19   After issuance of the construction final letter, program finance receives a copy along with the final estimate package to initiate the financial closeout process. The Utah DOT financial closeout process (see Figure 4) includes all tasks to make sure that all payments are made, issues are resolved, funds are reconciled, and the project identification number is closed in the Utah DOT electronic project management (ePM) system. Utah DOT performs financial project closeout ePM and the state of Utah’s Financial Network System (FINET). After all the utility agreements, ROW acquisitions, consultant contracts, and audits are closed out, the final voucher is prepared, and final payment is made to contractor along with the release of any retainage and bonding obligations. This marks the financial closeout. After the financial closeout, local government Stage Key Milestone/Closeout Tasks Project Cost up to $10 Million and/or Limited Scope Projects Project Cost Between $10 Million and $30 Million Project Cost Above $30 Million St ag e 1 or 1 A ( A ve ra ge 2 to 4 m on th s) Contract Original Substantial Completion Date (COSCD) From Contract Documents From Contract Documents From Contract Documents First Notice of Substantial Completion from Contractor First notice date First notice date First notice date Acceptable Notice of Substantial Completion from Contractor (ANSC) Last notice concurred by RE and FM Last notice concurred by RE and FM Last notice concurred by RE and FM Corrective Action Inspection Date (CAI) ANSC plus 3 weeks ANSC plus 3 weeks ANSC plus 3 weeks Actual Substantial Completion Date (ASCD) Contract Original Completion Date (COCD) From Contract Documents From Contract Documents From Contract Documents First Notice of Completion from Contractor First notice date First notice date First notice date Acceptable Notice of Completion from Contractor (ANC) Last notice concurred by RE and FM Last notice concurred by RE and FM Last notice concurred by RE and FM Acceptance Inspection Date (AI) ANC plus 3 weeks ANC plus 3 weeks ANC plus 4 weeks Actual Completion Date (ACD) St ag e 2 an d 3 (A vg . 4 M on th s) Initiation of Closeout (ICO) AI plus 1 week AI plus 1 week AI plus 2 weeks Region to Initiate DC-20 ICO plus 1 week ICO plus 1 week ICO plus 2 weeks Final DC-83 to Region Office ICO plus 1 week ICO plus 2 weeks ICO plus 2 weeks LB-95 A to Bureau of Materials ICO plus 1 week ICO plus 2 weeks ICO plus 2 weeks As-builts review and approval date ICO plus 4 weeks ICO plus 6 weeks ICO plus 8 weeks Final Change Order Execution Date (FCO) ICO plus 8 weeks ICO plus 10 weeks ICO plus 14 weeks Department’s acceptance package (DAP) execution date ICO plus 10 weeks ICO plus 12 weeks ICO plus 16 weeks Final Estimate approval by Region to Accounting (FE) ICO plus 14 weeks ICO plus 16 weeks ICO plus 20 weeks St ag e 4 (A vg . 4 m on th s) Proposed Final Certificate from Accounting ICO plus 18 weeks ICO plus 20 weeks ICO plus 24 weeks Proposed Final Certificate to Contractor ICO plus 20 weeks ICO plus 22 weeks ICO plus 26 weeks Signed Proposed Final Certificate to Accounting ICO plus 25 weeks ICO plus 27 weeks ICO plus 31 weeks Final Certificate from Accounting ICO plus 30 weeks ICO plus 32 weeks ICO plus 38 weeks St ag e 5 (A vg . 1 M on th ) Federal Closeout Package (FCP) to Director, Construction and Materials ICO plus 33 weeks ICO plus 35 weeks ICO plus 42 weeks Confirmation Date of Receipt of FCP ICO plus 34 weeks ICO plus 36 weeks ICO plus 43 weeks Source: New Jersey DOT 2016. Table 8. List of New Jersey DOT project closeout milestones and tasks.

20 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment 02R Construction Punchlist 03R Contractor Paperwork 06R Resident Engineer Paperwork 04R Materia ls Database Closeout 07S Region Paperwork 08E Final Estimate Packet Approval MS2 Construction Closeout MS3 Financial Closeout MS4 Project Close END 12P Issue Termination of Authority R-77 16C Prel iminary Final Voucher 18P Initial Funding Reconciliation 22C Reconcile FINET 26C Prepare & Distribute Final Voucher 28P Final Funding Reconciliation 29P Close Systems (FINET, ePM, FMIS) START MS1 02Z Close Consultant Contracts 04Z ROW Status Meeting 10E Close Utility Agreements 01A Audit 09R Utility Closeout Paperwork 14C Close ROW Resident Engineer (R) Project Finance (P) Engineer for Construction (E) Comptro ller (C) Project Manager (Z) Audit (A) Region Contract Specialist (S) Legend 30d 30d 30d 30d 30d 30d 15d 30d 10d 10d5d5d30d5d Days to MS2: 150Days to MS1: 0 Days to MS3: 205 Days to MS4: 260 30d 30d 30d 30d 30d60d 24C Close LG Agreements Figure 4. Utah DOT final review and audit flowchart for project closeout (Utah DOT University 2012).

Literature Review 21   agreements are closed, and relevant Utah DOT systems are closed. Project closeout officially ends for a Utah DOT highway construction project when all contract obligations are met and the project is closed out in ePM, FINET, and the FHWA FMIS (Utah DOT University 2012). Wisconsin Department of Transportation The Wisconsin Department of Transportation (Wisconsin DOT) recognized that clear and organized closeout planning is a necessity to efficiently manage the time required for consolidating the documentation involved in the project closeout process. Wisconsin DOT developed a proactive closeout procedure that reviews and maintains project records throughout the project. Figure 5 outlines the Wisconsin DOT project closeout practices that are used to help expedite closeout of projects by focusing on establishing closeout procedures early in a project, review and maintain documents throughout a project, and provide searchable records for refer- ence during project closeout and for future use. Wyoming Department of Transportation The Wyoming Department of Transportation (Wyoming DOT) performs project closeout using its internal project management program, called the Construction Management System (CMS). Throughout construction, project personnel are tasked to collect and load all project docu- mentation into CMS so that required documents, data, and information are completed and ready for use during project closeout. The district finals office reviews the project records to ensure that appropriate documentation procedures were followed for all phases of the project. Additionally, the resident engineer and the materials program reviews testing and material certifications as the project progresses, noting any discrepancies, errors, or missing documents so as to resolve issues at the time of occurrence. By being proactive during the construction phase, Wyoming DOT closes out projects more promptly, since less work is required at the end of the project. •Review project closeout procedures, requirements and timelines with project team •Assign action items and monitor progress • Identify team member responsible for recording the project closeout documents •Clarify what records are to be kept •Develop process of partial acceptance of work leading to final acceptance •Maintain cooperation of WisDOT technical support to provide feedback •Consolidate project closeout documents as each phase is completed in preparation of final closeout •Obtain agreement from project team to meet substantial and final completion deadlines Establish Closeout Procedures Early and Transfer to Project Processes •Review completed purchase orders and contracts to close out for prompt closeout • Identify closeout items that can be worked on simultaneously or in parallel •Maintain running punchlists for management of closeout items •Maintain material finals throughout a project •Conduct periodic review of preliminary finals to expedite final closeout •Review documenting procedures periodically to adjust for more efficient procedures and for future demands Review and Maintain Records Throughout a Project •Maintain all project records onsite in a single searchable location until project completion •Perform frequent and consistent audit reviews using onsite department specialist •Document all final records for easy retrieval manually or electronically • Identify clearly where records are to be kept during the project and after completion Provide Clear and Searchable Records for Use and Future Reference Figure 5. Wisconsin DOT practices used for expediting the project closeout process (2008).

22 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment The construction project closeout process used by Wyoming DOT is shown in Figure 6. After the contractor notifies Wyoming DOT of substantially completing the physical construction work, the district engineer conducts a final inspection of the project. If the project has been deemed complete, the district engineer submits a letter to the contractor indicating acceptance of the project. The construction closeout is achieved upon completion of signoff in the CMS by all involved parties as well as the budget program finalizing all outstanding transactions and encumbrances in project accounts (Wyoming DOT 2020). After the construction closeout, the final quantities will be reviewed and approved, and the resident engineer will then notify the contractor of final quantities and assessments. The budget program sends the contractor the prime contractor’s affidavit (form A-65), a copy of the final estimate, and a letter notifying them of the project closing. Project closings are then publicly advertised, and on the 41st day after the public closing announcement and receipt of the A-65 form from the contractor, the final payment to the contractor is made, bonding requirements are released, accounts are finalized, and the project is designated as closed in CMS (Wyoming DOT 2020). Figure 7 shows the budget closeout process used by Wyoming DOT. Chapter Summary The literature review results presented in this chapter document project closeout of highway projects at state DOTs. Chapter 2 provides information from DOT and transportation-related sources for understanding project closeout duration, the documentation needed for project closeout, and the processes documented by DOTs for closing out highway construction projects. Overall, state DOTs set goals for project closeout durations, and while the durations set vary from DOT to DOT, setting the goal helps DOT staff recognize the importance of timely project closeout. The documentation requirements also vary from DOT to DOT, but the amount of required project documents for closeout are plentiful for all DOTs. The processes used to close out projects follow the construction and financial side of project closeout while adhering to guidelines provided by the FHWA when projects use federal aid. The next chapter expands on these project closeout areas and information further by describing the results of the current data collected from the survey questionnaire.

Figure 6. Wyoming DOT project closeout process flowchart (2020).

Figure 7. Wyoming DOT budget project closeout process flowchart (2020).

Next: Chapter 3 - Current Practices in Closing Out Highway Construction Projects »
Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Get This Book
×
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

Although project closeout only entails a small portion of actual construction work, closing out highway construction projects for state departments of transportation (DOTs) is a complex and vital process that is a part of project delivery for highway construction projects.

The TRB National Cooperative Highway Research Program's NCHRP Synthesis 570: Practices for Closing Out Highway Projects from Substantial Completion to Final Payment compiles and documents information regarding the current state of the practice for closing out highway projects from substantial completion to final payment.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!