Practices for Closing Out Highway Projects from Substantial Completion to Final Payment (2021)

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37   Introduction This chapter documents project closeouts reported from eight state DOTs. Each DOT pro- vided information on their construction and financial closeout procedures, the practices used to monitor and track project closeout duration, the documents and associated project close- out documentation processes, the implications of not closing out a project, the various spe- cific project closeout processes and tools used, factors that delay project closeout, and lessons learned by DOTs in closing out highway construction projects. The next section outlines the selection process in choosing the eight state DOTs used for the case examples. Then, the sub- sequent sections summarize each of the eight state DOT case examples. Selection of Case Examples Data collected from the literature review and the survey questionnaire were used to identify state DOTs for further study by using the following criteria: • Has a formal closeout process and can discuss construction and financial project closeout; • Is comprehensive and there is availability of documents and data; and • Willingness of agency staff to participate. Based on these criteria, 13 DOTs from across the United States were selected initially for the case examples. Solicitation for participation occurred through phone calls and e-mails. Then, based on the contacts made and availability of DOT staff, the following eight DOTs agreed to participate in this study: Connecticut, Florida, Georgia, Iowa, Minnesota, Ohio, Oregon, and Texas. Participation involved conducting structured interviews with state DOT staff that have responsibilities associated with project closeout, collecting DOT project closeout documents and reports, and reviewing the findings with staff for accuracy. To conduct the case examples, the following protocol was used: 1. Contact DOT representatives to request participation in the case example. Due to the scope of work to investigate practices in construction and financial closeout, several DOT contacts with knowledge and experience in construction and/or financial closeout were obtained from the initial contact representative for each case example. 2. Perform interviews with key agency staff to identify project closeout practices at state DOTs. Specific attention focused on the current practices, challenges and delays, and lessons learned regarding project closeout. 3. Collect documents and reports regarding the DOT project closeout process for construction, accounting, and finance. 4. Follow up with the DOT representatives interviewed to verify the results documented in the case example and to obtain any additional information as needed. C H A P T E R 4 Case Examples of Project Closeout

38 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment A structured interview questionnaire was used for each case example. The questions were structured around six areas: (1) general information, (2) construction project closeout, (3) tech- nologies and innovation, (4) project closeout of locally funded projects, (5) project closeout for federally funded projects, and (6) final thoughts and lessons learned. This chapter documents the findings for each of the eight case examples based on the responses to the interview ques- tions as well as responses to the survey questionnaire and the review of associated DOT project closeout documents. Connecticut Department of Transportation The Connecticut Department of Transportation (Connecticut DOT) realized that project closeout is a crucial and difficult phase of a highway construction project. Therefore, internal Connecticut DOT construction and financing staff spent the last several years refining their project closeout processes to be more efficient, making strides in project closeout process improvement with the implementation of Lean Construction initiatives. Connecticut DOT defines project closeout as an important component in the overall project administration process in which inspection staff regularly prepare for closeout of a project by completing project records, quantities, summaries, materials testing, as-built plans, and other requirements as the work progresses, and a project is not complete until it is accepted, which requires that all physical and administrative requirements are complete and that any problems or deficiencies discovered during closeout are resolved (Connecticut DOT 2020a). The current closeout process enhanced the efficiency and has helped to reduce the time needed to complete and close the construction and financial components of a highway construction project. The Bureau of Engineering and Construction, which includes the Office of Construc- tion (OOC) and the District Construction Offices, handles the construction portion of project closeout. The Bureau of Finance and Administration, which includes Capital Services, Finan- cial Management and Support, and External Audits units, works on the financial closeout of a project while also working with the construction closeout team. The common external stake- holders involved with project closeout include the general contractor, the FHWA, subcontractors, construction managers, vendors, suppliers, manufacturers, and utilities and railroads. For project closeout, the Connecticut DOT tasks their inspectors to regularly prepare for closeout by completing project documents, records, quantity calculations, summary sheets, material testing, as-built drawings, and any other requirements as the work progresses and items are completed through the construction phase. By being proactive, the Connecticut DOT addresses problems and deficiencies as the work occurs so that these can be resolved in a timely manner while the contractor is still on site. Then, as the project approaches completion, the department discusses the requirements for accepting the work with the contractor at prog- ress meetings (Connecticut DOT 2020a). By being proactive and discussing closeout prior to construction completion, most project items have already been checked and balanced, which makes the final inspection process more efficient. When the major construction elements of a project are completed, and when checking and balancing confirms that the remaining contract value is approximately 1% of the estimated final contract amount, the district project engineer (PE) notifies the transportation supervising engineer (TSE) that the project is ready for the semi-final inspection. The semi-final inspec- tion’s purpose is to carefully review all details of the work completed to date and to document all remaining work that the contractor must complete to fulfill the obligations of the contract as well as any additional or deficiency work that is required to satisfactorily finish the project. The findings from the semi-final inspection are documented in a punch list that the Connecticut DOT provides to the contractor. The semi-final inspection requires the contractor, the district

Case Examples of Project Closeout 39   construction office, the OOC TSE liaison, and the OOC advisory team to be present along with representatives from other Connecticut DOT divisions, such as traffic, bridge design, and highway operations (Connecticut DOT 2020a). Once the contractor achieves the conditions of substantial completion, the PE notifies the TSE that the project may be substantially complete. The TSE reviews the project and remaining work and discusses it with the Assistant District Engineer (ADE). Once the TSE and ADE agree with the PE’s assessment, the project staff prepares the Notice of Substantial Completion letter that notes the date in which the construction is deemed substantially complete, which is then signed by the TSE and submitted to the contractor. Included with the Notice of Substantial Completion letter is a punch list of physical work that must be completed before conducting the final inspection and a punch list of administrative requirements that must be submitted within 30 days to the Connecticut DOT. Along with the Notice of Substantial Completion letter, a Project Status Form (Form CON-100) will be prepared noting the Substantial Completion date. The Notice of Substantial Completion letter, the physical and administrative punch lists, and the CON-100 forms are distributed to project parties within 14 days of the Substantial Completion date (Connecticut DOT 2020a). After the PE confirms that punch list items have been corrected, the final inspection takes place. At the final inspection, any deficiencies found are communicated to the contractor, who then corrects any deficiencies as soon as possible and before the Connecticut DOT signs off on the final inspection. After the final inspection is completed and all work is deemed corrected and completed, including any corrective work, a final inspection letter is sent to the contractor stating that the work is satisfactorily completed. At this point, the contractor is required to complete the Certificate of Compliance (Form CON-502D), as well as to provide any remaining documentation needed for project closeout such as material certifications, certified payrolls, and testing results (Connecticut DOT 2020a). After the Connecticut DOT receives the Certificate of Compliance from the contractor, the Certificate of Acceptance of Work (Form CON-500) is issued to the contractor. Project acceptance occurs once the work is deemed completed, construction signs are removed, and all supporting information, reports, forms, and records are submitted by the contractor and accepted by the Connecticut DOT. The Connecticut DOT requires the construction closeout items listed in Table 15 to be completed before project acceptance is considered. After completion of the applicable construction closeout tasks, the Certificate of Acceptance of Project (Form CON-501) is prepared by the district and sent to the OOC for review and signa- ture before sending it along to the contractor. Along with project acceptance, the Connecticut DOT initiates the final estimate and assembles the final package of documents and information. All project work has been completed. All reports and forms required on federal aid projects are completed. Certificate of Acceptance of Work is completed. Final Materials Certificate has been issued. Headquarters Final Review is completed. Correct submission of all documents required under the terms of the contract. Final Change Order is completed. All other project requirements have been satisfied or resolved. Final Estimate has been initiated. Warranty requirements are met. Construction Closeout Items Table 15. Connecticut DOT construction closeout items requiring completion before acceptance.

40 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment The final packet is then sent to the OOC as well as the Bureau of Finance and Administration (Connecticut DOT 2020a). Once Connecticut DOT accepts the final package and the CON-500 and CON-501 forms are completed, the contractor is relieved of any further contractual and bonding obligations, and the Connecticut DOT staff financially close the project. In conjunction with the construction closeout process, the first step of financial closeout includes verifying that project funding has been balanced out, there are no outstanding change orders that need to be addressed, and all payments have been made to vendors and third-party stakeholders. Then, after CON-501 is received, all purchase orders are paid and closed, and encumbrances and retainage are released. Specifically, purchase orders for the Connecticut State Police are paid within 90 days of the CON-501 being received. Next, the federal billing unit starts the final voucher process, prepares final expenditure and budget adjustments, and reconciles costs in the state and federal system. The financial closeout process that the Connecticut DOT’s Bureau of Finance and Administra- tion follows is a specific and sequential checklist from project fiscal management (PFM), which is shown in Table 16. The Connecticut DOT uses the final voucher to close out projects with the FHWA. The Connecticut DOT federal billing unit makes sure the voucher includes all the details in terms of audits and payments and calculates final expenditures to ensure that the billing matches the expenses. After completing the calculations and reviewing the details, the Federal Billing unit processes the final voucher, which triggers the final invoice so that the project is closed in the federal system as well as the state system. Duration to Close Out a Project The Connecticut DOT established milestones in the project closeout process so that the process continues to move forward and keeps people in check to close out the project timely. The following are milestones established by Connecticut DOT in closing out highway projects (Connecticut DOT 2020a): • Check the records of any cost-plus work; • Confirm that all testing has been completed in accordance with the contract; • Request Division of Materials Testing to provide a final materials certification as soon as the final quantities are known; • Notify the contractor of the project final quantities once they are known; • Check final quantities with the original contract and all construction orders to ensure that the final quantities are correct and in order; CTDOT Project Fiscal Management Checklist 1. Operating bureau approval to close 2. External audit reports/certifications completed 3. Project costs reconciled with audits/certifications 4. Purchase order(s) closed 5. Contract(s) closed 6. Payroll code(s) closed 7. Audit recommended SSJs reconciled 8. DBE reconciled 9. Special identification 30000 form (non-federal grants) reconciled 10. Contractor claims settled 11. Telecom charges ceased Source: Connecticut DOT (2020b). Table 16. Connecticut DOT financial closeout checklist.

Case Examples of Project Closeout 41   • Obtain contractor evaluation forms for the contractor and subcontractors; • Check the statement of working days with existing office records; • Check the construction report for accuracy and completeness; • Confirm that all construction orders have been approved; and • Confirm that as-built drawings have been completed. The Connecticut DOT uses on-time and on-budget percentages to track projects, including the project closeout phase. The OOC tracks the time, in days, that it takes from the end of charges to acceptance of the final package. The OOC also tracks the percentage of final packages submitted to OOC that have errors, which is important, because the final packages that do have errors take longer to process and approve, and that increases the project closeout duration. Connecticut DOT staff mentioned that currently about 50% of final packages have errors, which is an area that the Connecticut DOT is focusing on to improve. Documentation for Project Closeout The Connecticut DOT is aware that the eligibility of funding sources, such as federal aid or local funding, to participate in the cost of construction is contingent on proper documentation of the project. The FHWA requires the Connecticut DOT to develop and maintain a standard- ized system of documenting the work and the payments made, which is critical to the project closeout process. Project documents are to be tracked and collected as the work progresses, and the information included on the documents is checked for completeness and accuracy. By performing proper project documentation throughout the construction phase, the documenta- tion needed for project closeout is easier to compile. Documents related to Connecticut DOT project closeout, depending on the funding source, are listed in Table 17. Implications of Not Closing Out a Project When a project at the Connecticut DOT has been in the closeout phase for a long time, the department’s finance staff may find that there are expenses that cannot be charged to the account because the funding source is obsolete. At that point, staff are to find another funding source to charge those expenses for a project. If closeout occurred in a timely manner, then the funding would have still been there to use for the expenses. The history of project closeout at the Connecticut DOT is one that today realizes the impor- tance of timely project closeout, but in the past department staff noted that there was relatively no process for closing projects, which caused many issues that the Connecticut DOT is still dealing with today. With the Connecticut DOT reviewing and mapping their project closeout process in recent years, along with an attitude that project closeout is a critical phase of a project and should be completed in a timely manner, the department has worked diligently in recent years to reconcile issues with the way previous projects at Connecticut DOT were closed or not closed, as is the case for many projects. With the improvements made, the Connecticut DOT has expended many hours to reconcile and close out projects that have been in the system for a long time. Although this had to be done, and the Connecticut DOT recognizes that this was quality time spent, the Connecticut DOT also recognizes that if projects are closed out properly, then resources can be used in other areas, and funds can be allocated to other projects and tasks rather than tying up resources on a project that is not closed out in a timely manner. Processes and Tools for Project Closeout The use of e-Construction and electronic processes associated with project closeout, such as electronic payroll, has helped the Connecticut DOT become more efficient in closing out

42 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment projects. Documents are now all electronic, and project information and documents can be shared and reviewed among the project team as the information is readily available. Collecting and submitting required documents is easier, and all the documents are held in one place. Important closeout forms, including CON-500 and CON-501, are transmitted for approval elec- tronically and signed using PDF signatures, whereas contractor signed documents use digital signatures through DocuSign. In addition, tracking of project information and funds is done using e-Construction and shared via the project cloud folder so that anyone can check the status of the project at any time. Furthermore, the Connecticut DOT is progressing toward all records for projects being electronic. The Connecticut DOT plans to deliver construction projects using all electronic documentation and processes, including for project closeout. The Connecticut DOT uses an incentive with contractors regarding timely document sub- mission. The incentive, called mobilization and project closeout, is implemented once the con- tractor has not submitted proper closeout documentation within the contract time allotted. At this point, the Connecticut DOT withholds a portion of payment until they receive all docu- ments. Although this system helps to make contractors aware of the importance to submit final Construction Status – Municipality Projects (Form CON-100M) Construction Report Final Construction Orders Materials Certificate Final Estimate Invoice Summary and Processing (ISP) Certificate of Compliance: Project Engineer (Form CON-502A) Certificate of Compliance: State Inspection (Form CON-502B) Certificate of Compliance: Consultant Inspection (Form CON-502C) Certificate of Compliance: Contractor (Form CON-502D) Certificate of Compliance: Municipality (Form CON-502M) Final Item Quantities Federal Voucher Report Headquarters’ No Further Action Memorandum District Final Review Report of Project Records Final DBE or SBE Participating Report (Form 88-1) Certificate of Acceptance of Work (Form CON-500) Certificate of Acceptance of Work – Municipality Projects (Form CON-500M) Certificate of Acceptance of Project (Form CON-501) Certificate of Acceptance of Project – Municipality Projects (Form CON-501M) Time Extension Documentation Post-Construction Review Source: Connecticut DOT (2020a). Document Federally Funded – State Project Federally Funded – Municipality Project Department Funded – Municipality Project Letter of Transmittal Construction Status (Form CON-100) Table 17. Connecticut DOT project closeout documentation needed based on funding source.

Case Examples of Project Closeout 43   documentation and have the urgency to do so, Connecticut DOT staff mentioned that they still have issues gathering final material certifications and other contractor-supplied documents, which always seem to take longer to obtain than what was expected. Factors that Delay Project Closeout The Connecticut DOT mentioned that Disadvantaged Business Enterprise (DBE) require- ment issues tend to slow the closeout process down. DBE is verified with the construction team that proper payments have been made and whether DBE requirements were met. However, if requirements have not been met, then additional work is required to close out the construction portion of the project, and it does not move along to financial closeout until DBE issues are resolved at the construction level. For financial closeout, DBE is reviewed on federally funded projects, as the FHWA has strict DBE requirements to follow when using federal aid for high- way construction projects. If requirements are not met or documentation is incomplete, then DOT staff will need to resolve these issues and justify the resolutions, which Connecticut DOT staff noted takes considerable time in some cases, delaying the closeout process. Another aspect mentioned by Connecticut DOT staff on municipal projects is the lack of urgency from local entities to close out a project and the fact that some local entities may not be close to becoming all electronic in their paperwork processes. Collecting documents from local municipalities takes longer than it should in many cases because the local entity does not see the value in closing out a project in a timely manner and takes its time in submitting documents. Then, while Connecticut DOT is using e-Construction for project closeout, local entities may not be, and therefore, older, paper-based processes are used. The lack of urgency and electronic processes extends the closeout process. Although the Connecticut DOT prepares their inspectors to be auditing the project as work items are being completed and inspected, getting project documentation to the point where the project is ready for final audits is a challenge. A lack of resources along with project complexities and the fine details needed for audits tends to slow down the auditing process, which impacts moving to close out the project. If an audit finds that there was an overpayment, then the Connecticut DOT needs to collect the money, which tends to be difficult since the Connecticut DOT is asking people to give money back. Another area slowing down project closeout at the Connecticut DOT is the lack of prompt- ness on the part of local utilities in submitting invoices for a project. Currently, the Connecticut DOT allows utilities up to one year after completion of work to submit for payments. Therefore, accounts cannot be closed out so that payments can be made to utilities, which take longer to come in and process. Lessons Learned The Connecticut DOT reported the following lessons learned for closing out highway construction projects: • Work as a team to complete project closeout: The Connecticut DOT learned that an important aspect of the project closeout process is that it works better when everyone involved works together, such as the construction and financial staff that work on project closeout. The DOT realized that working as a team concurrently on closeout helps to solve problems early in the process, which can save considerable time. Buy-in to the project closeout process is key, as individuals gain self-awareness of how the process runs and what they are able to do to help improve the closeout process.

44 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment • Implement process improvements: The Connecticut DOT implemented Lean Construction techniques throughout the department, which helped the department map out the project closeout process. The mapping process involved many of the Connecticut DOT closeout staff from the construction and financing sides. By going through the process together, the team found the areas that often slowed down the closeout process and then worked together to improve the process rather than point fingers. Also, Connecticut DOT staff have a better understanding of how their roles and responsibilities contribute to timely project closeout as well as individuals’ roles and responsibilities and how they affect each other’s work. • Streamline the closeout process: The Connecticut DOT is revising closeout processes so that not every single detail is needed to close a project. For example, when an account has a balance, Connecticut DOT staff work to reconcile that account to get it zeroed out. This can be tedious and takes time, even for very small amounts. In addition, when the Connecticut DOT strug- gles to get proper documentation from the stakeholders, project closeout is at a standstill. Therefore, revising processes using Lean Construction initiatives of process improvements to alleviate difficulties in closing accounts and gathering project documents makes project closeout more efficient. Florida Department of Transportation The Florida Department of Transportation (Florida DOT) defines project closeout as the time when the construction work has been completed along with completing any corrective work so that the department can accept the work, process the final payments, and close out financial accounts. The Florida DOT begins a construction project with the end in mind, meaning that Florida DOT staff plan for project closeout during the pre-construction phase of a highway construction project. Closeout entails the Final Estimates Office handling the construction closeout component, whereas the Florida DOT Office of the Comptroller handles the finan- cial closeout component. External stakeholders involved with highway project closeout include the contractor, the FHWA when federal aid funds are used for a project, construction and program managers when applicable, vendors, utility companies, and the railroads. The Florida DOT has developed the Final Estimates Guidelist (Florida DOT 2019), which is a checklist of the steps and documents to follow and collect for properly closing out a highway construction project. Project closeout does not commence at Florida DOT until the contractor completes all contractual construction work. Once the contractor has completed the scope of work, the contractor notifies the Florida DOT that the work is complete and ready for final acceptance. For the contractor performing the work, gaining final acceptance requires agreement from the Florida DOT to officially end the construction phase and begin the warranty period with the contractor. For the Florida DOT, final acceptance signifies the completion of the construction contract and initiates the final financial closeout of a project (Florida DOT 2018). Once the contractor has notified the project engineer that all contract work is complete and ready for acceptance, a final inspection is performed by the Florida DOT, which is to be done within seven days of that notification. The inspection includes the Florida DOT project administrator, the resident engineer, the contractor, and if applicable, representatives from bridges and structures. If the final inspection performed by Florida DOT determines that the work has been satisfactorily completed, then the inspection qualifies as the final inspection, and final acceptance is granted to the contractor by way of a written notice of acceptance. In cases where the final inspection finds that some work has not been completed, then the Florida DOT provides a list of remedial work to complete to the contractor in order to gain final acceptance (Florida DOT 2018).

Case Examples of Project Closeout 45   With signoff on final acceptance, a final monthly progress estimate is developed by the Florida DOT District Construction Office, which pays the contractor for the work completed. One last estimate is processed after the monthly estimate, and it is considered the final estimate. For the final estimate, the entire project is reviewed for accurate payment, showing the committed work and justification for making payment. Also, it is at this stage that the District Construction Office reviews for any remaining issues in terms of liquidated damages and retainage. The final balance on the final estimate is zero, meaning that all work has been paid for, and nothing is owed to either the contractor or the DOT. Once the final estimate offer is submitted to the contractor, the contractor either agrees with the final payment offer or not. When contractors decide to not agree with the final estimate offer, the closeout duration can be extended, as a dispute may arise between the Florida DOT and contractor. Then, within 90 days of the Florida DOT making the final payment offer, the contractor is to • Accept the balance due or refund the overpayment; • Properly maintain the project as specified; • Furnish an affidavit that the contractor has paid all bills for the work performed; • Gain consent from the bonding surety for final payment to be made; • Comply with all wage-rate provision requirements; • Submit all required mill tests and analysis reports; • Furnish the construction compliance with specifications and plans certification (Final Certification); • Submit electronic final as-built drawings and make sure they are acceptable for the DOT; and • Furnish all manufacturers’ warranties (Florida DOT 2020). Once all steps are complete and the contractor has accepted the final payment offer, the contractor is no longer responsible for the project, unless the project includes a warranty, in which case the warranty period begins. At this point, the responsible Florida DOT district indexes the final electronic as-built plans, which are made available to Florida DOT staff within 10 days of closing the contract. With final acceptance achieved, the Florida DOT Office of the Comptroller is notified to begin the financial closeout. All projects are based on budget, so the financial closeout makes sure that the Florida DOT has the money properly allocated and budgeted. The Office of the Comptroller confirms that all payments are made on the contract by making sure that requirements are met, specifically the receiving of the Final Estimate and acceptance letter. Once funds are reconciled, the Florida DOT proceeds with final payment and closing out of the contract in the Florida DOT contract funds management (CFM) system. Funding for projects is earmarked with local, state, and federal funds. Closing out the finan- cials for a highway construction project follows the same processes regardless of the funding source or sources used on a project. Florida DOT uses the FHWA FMIS system and follows the federal aid closeout process and has not had closeout issues with federally funded projects recently. Duration to Close Out a Project Policy and experience have been used to set the goal for project closeout duration at 275 days. However, Florida law allows contractors up to 820 days to finish filing claims from the final acceptance date, meaning that issues or disputes can take up to 2.25 years after final accep- tance (Florida DOT 2018). The Florida DOT is averaging 186 days to close out projects, which is 3 months less than their goal. Florida DOT staff mentioned that the goal of 275 days may need a revision to account for improved efficiencies in project documentation due to the use of e-Construction.

46 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Along with measuring the average days to close out a project, Florida DOT uses two other performance measures to track project closeout. First, the Final Estimate is to be submitted to the contractor within 30 days of final acceptance. From that point, the contractor has 90 days to accept the Final Estimate offer. Second, the Florida DOT has requirements for post-audit reports. Only a portion of Florida DOT projects are audited, and for the projects that are audited, they are to have changes that are no more or less than 0.5% from the final contract amount. Documentation for Project Closeout Documentation is a crucial component of project closeout due to the many various docu- ments required. Documents that the Florida DOT collects from the contractor include an affidavit that all bills are paid and that the surety has provided consent, wage-rate provision requirements, DBE requirements, testing reports and analyses, material certifications, final inspections, as-built drawings, and warranties. Table 18 outlines the Florida DOT’s guide list along with the documents used for the closeout process. Implications of Not Closing Out a Project Florida DOT staff noted that delays in closing out a project can hold resources to that project, which does not allow the department to move resources to other critical projects in a timely manner. Furthermore, the more time closeout takes, the more funding burden that can fall on the Florida DOT, as Florida state law directs that any state agency is to make payment to third- party contractors within 30 days, or that payment will accrue interest. Therefore, it is critical to follow the closeout process for construction and financing and to complete the work in a timely manner so that resources are not tied up on projects that are taking longer than expected to close and payments are made within the timeframe set by state law. Processes and Tools for Project Closeout The Florida DOT noted that its process of closeout follows a formalized procedure, as docu- mented in the Florida DOT Standard Specifications for Road and Bridge Construction, the Construction Project Administration Manual, and the Review and Administration Manual for Final Estimates. Projects follow the outlined procedures in these references regardless of the work and funding sources. For Florida DOT staff to perform closeout activities, the department provides training. The Florida DOT has a training program called the construction training qualification program (CTQP) to train department and Construction Engineering and Instruc- tion consultant personnel. A portion of the training focuses on project closeout processes and procedures at the Florida DOT. By training both internal and consultant employees, all can function in the same closeout roles and responsibilities. To encourage timely closeout, the Florida DOT uses milestone bonuses in construction contracts, which are incorporated into some project contracts to help keep the project on schedule, such as achieving the contract substantial completion date, completing corrective work in a timely manner, and achieving final acceptance within the contractually required time. Additionally, liquidated damages are incorporated into construction contracts that will charge a fee to the contractor for delays in completing the construction work by the agreed upon contract completion date. Florida DOT staff did note that they do not tend to issue liquidated damages often, as negotiations between the Florida DOT and the contractor tend to work well and keep the team working toward the same goal.

Case Examples of Project Closeout 47   Tools for project closeout at Florida DOT include the use of e-Construction, which incor- porates the use of AASHTO Site Manager and the Florida DOT’s internal construction and financial programs. The use of these technologies has led to the Florida DOT incorporating electronic sharing of documents and information via a cloud-based server between stake- holders, which makes closeout information available in real time and to anyone involved in closeout. Electronic documents can be reviewed and signed digitally, which makes closeout more efficient and eliminates the necessity of using paper documents. Warranties Ensure all warranties and value-added items are entered prior to final acceptance to be tracked and updated by the Warranty Coordinator. Final Estimate Process progress estimate(s) to pay remaining work items and reduce retainage, to ensure Final Estimate is zero, when possible. Verify that all Certification of Quantities from the Contractor are paid. Pay bonus or incentive payments, if applicable, and include a copy of the Contractor’s letter requesting the bonus and waiving claims per Contract. Verify that all pay adjustments have been made appropriately. Verify that all entries in the Plan Summary Boxes match the final quantities. Cross-reference the final quantities to the Pay Item Summary and Certification Sheet. Offer Letter Only one Offer Letter shall be submitted to the Contractor. Revised Offer Letters are not allowed. Types of Offer Letters: The Offer of Final Payment letter is issued when the Contractor is offered a positive, preferably zero, final amount due. The Request for Refund letter is issued when the Contractor has been overpaid and is offered a negative amount due. Ensure that the Offer Letter has the correct attachments, including, but not limited to: TSO Estimate Acceptance Letter(s) 21-A Contractor Survey List of missing documents required by the Contractor Submit the Final Estimate Offer Letter to the DFEO for review to ensure that it is correct prior to sending to the Contractor. Submit the Final Estimate Offer Letter to the Contractor within 30 days of final acceptance. Final Estimate Documentation Submit the Final Estimate Documentation to the DFEO within 30 days of final acceptance. Submit Form 700-050-20, Final Plans and Estimates Transmittal, and ensure that all items included in the Final Estimate documentation are indicated. Ensure that Form 700-050-28, Final Estimates Office Record of Final Plans and Documents, within the Final Estimate Status application, is initiated and the contract time is correct. Ensure that all contract time backup documentation is in the Contract Time Folder, including, but not limited to: Notice to Proceed Letter; Begin/End Construction Letter; Time Extension Letters; Supplemental Agreements and Work Orders; Final Acceptance Letter. Utilize Ad-Hoc Reports to verify that contract time charges are correct. Submit the Explanation of Overruns and Underruns report. Notification of Findings Respond to any findings by the DFEO on the Post-Audit Review (PAR). Note: Documents are shown in italics. Table 18. Checklist used by Florida DOT for project closeout.

48 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Factors that Delay Project Closeout The Florida DOT noted that changes in staff impact the closeout process. The department mentioned that limited staff availability and changes in the project team personnel tend to slow down closeout, especially in cases when proper documentation did not occur throughout the project. When issues arise with construction closeout documents or determining a payment situation for an occurrence that happened early on in a project, these are much harder to resolve when dealing with changes in personnel. Therefore, the Florida DOT plans for project closeout early in the construction process to make sure documentation is occurring properly so that whoever is involved in the project knows the whole story when it is time to close the project out. Another delay the Florida DOT deals with is the impact of third-party stakeholders. Utilities is one of the external stakeholders that tends to hold up project closeout. Coordination with the utilities tends to take time, and trying to get utilities to follow the DOT schedule is difficult to accomplish. Florida DOT staff also mentioned that railroads also tend to delay project closeout due to coordination issues, but not as much as utilities. For as-built plans, the Florida DOT has a final as-built plans section in the guide list, which outlines the steps for verifying final as-built plans, updating as-built plans, and obtaining key and signature sheets from the engineer of record (Florida DOT 2019). However, Florida DOT employees in construction and finance noted that they have experienced delays in getting a proper and complete set of as-built drawings at the end of projects. To overcome this delay, the Florida DOT passed the as-built responsibility to the CEI consultants that perform the construc- tion inspections for the project. The department uses third-party consultants for construction inspections. This way, as-built drawings are created as the work is performed so that proper documentation is done throughout construction rather than just at the end. The Florida DOT does on occasion ask for specific as-built drawings from contractors, such as directional boring, intelligent transportation systems (ITS), and signalization work. Finally, claims do delay project closeout, such as the contractor not agreeing with the final estimate offer if the contractor determined that the DOT owes them money or time for the work. When this occurs, negotiations take place to resolve any disagreements and gain acceptance by the DOT and contractor on the final estimate. Although this tends to resolve the issue, it can take time, which then delays closeout from finishing. Lessons Learned The Florida DOT reported the following lessons learned for closing out highway construction projects: • Start planning for closeout at the beginning of a project: Project closeout needs to be a part of the construction phase. Begin planning for project closeout before the project even starts, as the information needed at the end of the project includes information from the entire duration of the project. Better documentation and thinking about the end goals while constructing a project leads to a more efficient project closeout. Having that mindset to think about closeout during construction helps to keep the project expectations clear. • Communicate with the team: The Florida DOT realizes that project closeout is a collabora- tive effort, including the construction and finance personnel within the department and the third-party consultants. Florida DOT staff said that communication between stakeholders is a key factor for timely and successful closeout. All parties need to be on the same page and recognize the importance of project closeout. Communicating allows for more transparency in the project closeout requirements and helps to alleviate potential claims that can delay the project closeout process.

Case Examples of Project Closeout 49   • Stay on top of project finances throughout construction: Make sure that the project teams in the different districts, along with their field personnel, are monitoring and tracking all costs throughout the construction phase. Tracking how finances are used, when they are used, and to whom they are paid throughout the project helps to reconcile the financial informa- tion at the end of the project rather than having to go back and figure it out after the fact. The more the project team is aware of the finances, the easier closeout will be. Georgia Department of Transportation Project closeout at the Georgia Department of Transportation (Georgia DOT) is a process that includes conducting a closing conference and final inspection, correcting deficiencies in the work, gaining final acceptance and maintenance acceptance, receiving all documents and contractor’s performance reports, and completely closing out the contract (Georgia DOT 2019). The Georgia DOT recognizes that project closeout is a crucial component to every highway construction project, and the department has initiated improvements to their closeout process in recent years. The improvements made have streamlined the closeout process, making it more efficient and accountable to the stakeholders involved. Closing out projects at the Georgia DOT includes the Construction Division that works with the district construction offices in closing out the construction portion of a project. The Finance Division, which includes the Financial Management Office and the General Accounting Office, handles closing out the finances for a highway construction project. Along with the internal divi- sions and offices at the Georgia DOT, the external stakeholders involved in project closeout are the contractor, the FHWA for federally funded projects, construction managers and program managers if they are involved, and vendors, as materials and certification of materials used on a project are crucial documents to project closeout. The Georgia DOT also works with the local utilities and any railroads that cross a project site, which are also a part of the closeout process. To begin the closeout process, the Georgia DOT project engineer performs a closing confer- ence with the project team 60 days prior to the expected project completion date. The closing conference accomplishes the following: • Discussing all outstanding items of work, which includes a list of items to correct. The contractor is then to resolve any outstanding work to alleviate potential liquidated damages and for the Georgia DOT to accept the project. • Requesting a list of materials certifications, final reports, or other closeout documents needed. • Completing a Post-Construction Review Form with input from the contractor and submit- ting the form to the Office of Engineering Services (Georgia DOT 2019). After the closing conference, and after outstanding work and requests have been completed, the Contractor submits written notification to the Georgia DOT of project work completion, including any remedial work completed, indicating that the project is ready for a final inspec- tion. The Georgia DOT then has seven days to schedule and conduct the final inspection. After completing the inspection, the Georgia DOT then furnishes a correction list to the contractor, which includes work that is to be revised as well as the necessary documents needed before issuing final acceptance. Once the contractor provides the necessary documents and corrects all work that is docu- mented as needed to be revised, the Georgia DOT provides final acceptance to the contractor in writing. A final estimate request package is then submitted for approval from the state’s Construction division office and once approved, is passed on to the General Accounting Office for review. The final package from the construction office includes a final estimate (for material quantities and costs as well as labor hours and costs), final acceptance, and materials cost audits

50 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment and certificates (Georgia DOT 2019). Before sending the final package, construction project staff make sure the correct documentation is supplied properly along with any project-specific supporting documents used to reconcile costs and check that information has been entered into the Georgia DOT financial system. As soon as the accounting office has reviewed the final package, the revenue unit in the accounting office creates a purchase order closeout and adds a document to the final package stating that the revenue unit within the office of accounting has reviewed the final package and is ready to move on to the Financial Management Office to finalize closeout for a project. Financial management staff then review the final package and the final expended amounts. The Financial Management Office reviews the final package to make sure that expenses are correct, validating that purchase orders have in fact been closed out, and expenses in the accounting system match what is on the invoices. The final amount is then reconciled in the accounting system to make sure that obligated funds are in line with expenditures, which balances the project so that there are no remaining funds to expend. Any residual balance of funds is released at closeout. Reconciliation of the final package leads to the Financial Management Office generating the transactions to close out a project, including final payments to the contractor and from the FHWA when federal aid is used. Once all transactions are signed off, the budget office closes the project in the state accounting system. The Financial Management Office will also include the project management requirements to show that a project has been closed. Project closeout entails closing out accounts funded from local, state, and federal sources. Typically, project closeout follows the same processes regardless of the funding source. For federal aid projects, the Georgia DOT uses the FHWA FMIS and follows the FHWA closeout process, knowing that FHWA looks at the project as a whole, meaning that all documentation needs to be submitted and all information needs to be correct before FHWA signs off on a project. When local funds are involved, the Financial Management Office and the General Accounting Office review funds before starting the project closeout process to make sure that local funds are correctly applied to the project. However, Georgia DOT staff stated that regardless of the funds, costs are to be reconciled and transactions finalized for a project to be closed out and removed as active accounts from their financial system. Federally funded projects require the extra step of closing it out with FHWA, and although non-federal aid projects do not have that requirement, they are subject to the same degree of scrutiny and examination. Duration to Close Out a Project Georgia DOT uses an existing policy for tracking the project closeout duration, which is based on an internal analysis conducted a few years ago in which the Georgia DOT examined the workflow from semi-final payment to final payment, inclusive of contractor releases, while implementing a process improvement regarding materials certifications and internal financial audits. The current goal for the Georgia DOT to close out a project is 180 days. Figure 15 shows the Georgia DOT project closeout timeline. The Georgia DOT revised their contract administration process to drive at releasing funds tied to projects that lingered around for a long time as well as improve the efficiency of project closeout. For example, prior to revising the process, the Georgia DOT had 140 days contractu- ally built into the process for contractor releases, which was a result of working with the local contractor association. However, the department realized that this duration could be reduced, and it was able to negotiate with the contractor’s association and reduced that duration to 80 days.

Case Examples of Project Closeout 51   An improvement in project closeout duration recently experienced by the Georgia DOT is a change made associated with a project’s punch list. Instead of issuing a punch list, which would require stopping the clock and chasing contractors to complete work, the Georgia DOT now requires the contractor to satisfactorily complete all construction work, including providing all necessary documentation before accepting the project. This means that if the work con- tinues beyond the contractual completion date, liquidated damages accrue, which contractors are aware of and would rather avoid. The Georgia DOT has recognized more accountability using this approach and more urgency on the part of the contractor to get their work done in a timely manner. Documentation for Project Closeout Financial project closeout for the Georgia DOT requires making sure to make all payments and close all purchase orders. The construction office submits a final package of documents to the accounting office so that financial closeout proceeds. Without the required documents, and all completed properly, financial closeout does not begin. The final package constitutes the final estimate package information developed by the district construction office. This final package or final voucher for projects using federal aid includes the documents that construction and finance will review and approve for project closeout. Table 19 lists the documents found in the final package. Implications of Not Closing Out a Project The implications mentioned by the Georgia DOT in not closing out projects in a timely manner include the negative effect it has on the relationship between the department and its contractors and the inability to allocate resources comprehensively to other projects and responsibilities; it also costs the DOT more money and reduces the number of projects that can be completed annually. The major implication noted by Georgia DOT staff was the change in personnel and the time it takes to complete a project. When a project takes many years to complete, personnel may change, and if proper documentation and handoff of information does not occur, the personnel left at the end of a project may not know what happened at earlier stages. Therefore, project closeout will be delayed and may result in closeout absorbing many additional resources that could be used on other much needed projects. Figure 15. Georgia DOT project closeout timeline (2019).

52 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Processes and Tools for Project Closeout A few years ago, construction project closeout was revamped, and that triggered improve- ments for closeout. The Georgia DOT examined the entire workflow for project closeout, chal- lenging why the previous steps were taken and why they were limited to certain groups. Two key lessons were learned from this analysis: 1. The release periods given to the contractor (accepting final statement and final release) reflected an era that did not include email acceptance and were considered excessive in today’s digital project environment. 2. Reconciling project materials could and should occur as a project is built, not on its completion. Overhauling the closeout process and focusing on these two lessons on the construction side of closeout has led to an improved process that has reduced the turnaround time on gaining proper material certifications. In addition, the Georgia DOT follows the performance of project closeout, using performance measures such as the number of days between final inspection and final release (see Figure 16). An important aspect of project closeout mentioned by Georgia DOT closeout staff is the implementation of succession planning for the Georgia DOT workforce. Succession planning is used for workforce development and cross-training so that people learn different roles and responsibilities. Therefore, Georgia DOT staff can perform multiple roles when they are needed. This is true for closeout staff in the General Accounting Office and Financial Management Office, which is using succession planning and training to bring people in and up to speed on things. For example, the Financial Management Office recognizes that people will be retiring in the next 2 to 5 years, and cross-training and succession planning are needed to make sure closeout is covered by people that know what to do in case someone is out or leaves the DOT. However, Georgia DOT staff mentioned that even with best efforts in training and succession planning, it tends to be very difficult to collect proper and detailed information for historical projects or projects that have taken a long time to reach project closeout since the personnel that may have been involved are no longer available. Final Package Documents 1. Approved Waivers of Liquidated Damages 2. Audited Item Quantity Report 3. Audited Contract Status Report 4. Change Order Report for each change order 5. Contract modifications 6. Contractor Performance Reports 7. Final Acceptance Letter 8. Final DBE Documentation, including any Shortfall Letters 9. Final Exception Report 10. Final Package Checklist 11. Item Quantity Report 12. Labor interviews 13. Pavement smoothness test results 14. Payroll Review Forms 15. Pit Releases 16. Training Program Documentation Table 19. Documents required for Georgia DOT final package.

Case Examples of Project Closeout 53   The Georgia DOT uses e-Construction and AASHTOWare during project closeout. Using electronic documents and digitalizing many construction-related processes, including project closeout, has helped to make the closeout process more efficient. However, even with the use of shared documents for reviewing information, the delays associated with external parties providing the documents have not changed with the advent of e-Construction. Processes are more efficient since information is shared real time, but Georgia DOT staff noted that even with the use of e-Construction, project closeout still entails many paper documents that are passed around for review and signature. Factors that Delay Project Closeout The Georgia DOT has run into delays associated with local entities in terms of the funding, as well as dealing with the utilities, and the railroads that are a part of projects. Payment and expen- diture disagreements between the DOT and utilities tend to hold up project closeout, as well as receiving timely invoices from utilities to close out project accounts. Railroads tend to work on their own schedule based on the contract between the DOT and the railroads. The Georgia DOT Figure 16. Screenshot of the Georgia DOT project closeout performance measures report.

54 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment has experienced difficulties receiving invoices in a timely manner, which impacts closeout since all invoices and payments are needed to be complete before closeout can be official. An area of ongoing delay issues that the Georgia DOT experiences is associated with locally funded projects. In an example provided by Georgia DOT staff, once a local entity has its money, there is a lack of priority by the local entity to close out a project in a timely manner. If a local match in funding is a part of the project, project closeout takes longer to resolve matching funding issues. Furthermore, the Georgia DOT project manager, the revenue unit, and the finan- cial management staff need to agree on how to apply these funds and making sure they are recon- ciled properly. The contract agreement states the intent of local funds and, therefore, requires the revenue unit and Financial Management Office to review and ensure that the expenses are applied correctly to the local funds. Coordination of project closeout can sometimes lead to delays. If federal funding is used on a project and proper closeout has not occurred in a timely manner, then the project may show up on the FHWA FIRE report of inactive obligations. Commonly, when this occurs, it is because the Office of Financial Management has not received the final package from the General Accounting Office and has not shown up on the closeout list for financial management. An inquiry then takes place to find out where in the closeout process the package is at currently. The delay is that the financial side of a project does not receive the final package in a timely manner in regard to the last activity that was generated in the federal system, and therefore, closeout in the Financial Management Office has not begun; all the while it has now shown up on the FHWA inactive list. Georgia DOT staff noted issues and delays associated with the lack of consistency in staffing. By the time a project is ready to closeout, proper notification from the construction side or project manager may not occur, since the project manager has moved on to another position or left the DOT and someone new that does not know the history or process to close out the project is in charge. In some cases, the people on the construction side do not have the information or history of the project, and so closeout was not initiated properly or in a timely manner. This makes it difficult to gain the proper authority from construction so that the financial closeout process can begin. In some instances, the Georgia DOT noted delays associated with the right-of-way (ROW) for a project. Closing out the ROW first requires the Financial Management Office to generate the ROW cost certificate based on the expenses paid to date shown in the accounting system. The ROW office receives the ROW cost certificate that then reviews the project ROW expenses to make sure that they agree with the associated ROW acquisitions. Once the review is complete, the ROW office signs off and sends it back to the Financial Management Office. In all, this process is supposed to take 30 days, but many times it takes longer than that to get ROW approval of the ROW costs for a project. One reason for this delay, as mentioned by Georgia DOT staff, was that the ROW cost certificate is not created until the Financial Management Office receives the final package, and it is not until financial closeout is in progress that ROW becomes involved in the project closeout process. Labor expenses are finalized and included with the final package from the construction office. The General Accounting Office and Financial Management Office review the labor expendi- tures, but typically for federally funded projects a line-by-line reconciliation is not necessary since labor expenses qualify. However, when using bonds or local funds to finance projects, labor is examined more closely, as it does not qualify to be covered by bond-funded projects, and typically line-by-line reconciliations are needed. When examining labor costs, if an overrun on the labor element of a project occurs, either the Georgia DOT requests funding to cover labor expenses that do not qualify or the labor charges would have to be moved to other cost accounts, such as office overhead.

Case Examples of Project Closeout 55   Georgia DOT staff also noted that construction claims can delay closeout. When claims tend to drag on, the project may end up on the FHWA inactive list. However, the Georgia DOT cannot control closing the project out until the litigation is finalized. It is important to under- stand that claims can cause closeout delays, but the Georgia DOT does not experience this situ- ation often. Lessons Learned The Georgia DOT reported the following lessons learned for closing out highway construc- tion projects: • Thoroughness of closeout: In most cases, project personnel are eager to get the funds for a project once they are authorized, as there is an urgency to get the project going. However, Georgia DOT staff have noted that the same eagerness and urgency is not seen during con- struction or at the end of a project to track and monitor costs. Therefore, the Georgia DOT encourages that staff plan for closeout during construction and to implement the same eager- ness and enthusiasm seen at the beginning of a project at the end of a project to make sure projects are closed successfully. • Minimize the number of funding sources involved in a project: the Georgia DOT noted that projects may have one or more funding sources, depending on the project. In fact, the Georgia DOT noted some projects with 10 to 15 funding sources. When projects have multiple funding sources, all costs still need to be reconciled, and the multiple accounts and sources complicate closeout and lead to project closeout delays. By keeping the number of funding sources to a minimum, the Georgia DOT found that it makes closeout easier and it takes less time to reconcile all the costs involved. Iowa Department of Transportation Project closeout at the Iowa Department of Transportation (Iowa DOT) is the process that includes the completion and inspection of field work, the completion of any corrective action items, the issuance of the statement of completion and final acceptance of the work, the final audit and estimate process, and the assembly and submission of the final voucher for the FHWA and final payment to the contractor (Iowa DOT 2019). Within the last 5 years, the Iowa DOT migrated to an electronic-based project closeout process due to the department’s use of e-Construction. The electronic-based closeout has helped the Iowa DOT to be more efficient and timelier in closing out projects. Closing out projects at the Iowa DOT involves the district offices, specifically the Resident Construction Engineer Office that handles the construction and field closeout of a project. The Finance Bureau in the central offices of the Iowa DOT handles the financial closeout of a project. External stakeholders involved in project closeout include the contractor and the FHWA for projects using federal funds, and construction managers, vendors, suppliers, and manufacturers are also important to closeout for verifying quantities and payments. To finalize an Iowa DOT highway construction project, the construction work needs to be completed first. Once a project nears completion, a Project Engineer’s Pre-audit (PEP) takes place on the project, which includes reviewing field documentation, checking all records for completeness and accuracy, and conducting an independent office audit of all documentation while preparing for the district Resident/Region Construction Engineer (RCE) audit (Iowa DOT 2019). So, after construction work is completed and a final inspection occurs with the project engineer accepting the contract work, the Statement of Completion and Final Acceptance of Work (Form 830435) is completed and signed, which then triggers the start of the district RCE

56 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment audit and a materials audit. The project engineer completes Form 830435 within one week of field completion and acceptance, meaning that the contractor does not have to come back. Note- worthy is that Form 830435 can be processed while collection of material certifications and any contract modifications are ongoing, meaning that most of the project documentation needs to be ready, but final documents can still be processed after acceptance. Many aspects of financial closeout at the Iowa DOT revolve around the audits used throughout construction as well as the RCE audit. The district RCE audit is conducted once all construction contract work is complete, the PEP is complete, and the final packet of required documents is ready for financial processing. The RCE audit reviews all records in the following areas: • Internal office controls, procedures, and documentation; • Materials certifications and test approvals; • Field documentation; • Internal office audit; and • Final pay quantities (Iowa DOT 2019). The Audit of Final Pay Estimate, Form 830301, is then used to report any deficiencies or errors found in the audit. Once the corrections are made, the RCE audit is complete. Form 830301 is signed, and the district RCE office sends the final packet to the Finance Bureau to begin the financial closeout process. Once Form 830435 is received along with the final packet, the accounting unit reviews the information. Receipt of the final voucher triggers a final reimbursement request. The final voucher documents indicate to the accounting unit that the project is done, and accounts can be closed. Funds are reconciled to check on what has been spent and for what, any adjustments are made and finalized, and accounts are zeroed out. The Authorization for Final Payment (Form 830436) is then completed, certifying that all tests and measurements have been received, documented, reviewed, and accepted so that the work is acceptable and final payment can be made. The accounting unit can then de-obligate funds for federal aid projects and complete the closeout voucher in the FHWA FMIS system. Projects using local funds follow a similar process to close out accounts, as all aspects of project closeout are electronic at the Iowa DOT. Figure 17 is a flowchart of the construction project closeout process used at the Iowa DOT, and Figure 18 continues the process to financially close out the project once construction has submitted the final packet. Duration to Close Out a Project The Iowa DOT goal for project closeout is 90 days. As Iowa DOT closeout staff mentioned, the audit process used as a project progresses throughout the construction phase has helped to make sure that most of the closeout work occurs during construction and is not left for the end. Therefore, smaller projects should be expected to close in much fewer than 90 days, but even for the larger projects, Iowa DOT aims to close those out within 90 days of final acceptance of work. The Highway Bureau and the district offices track project completion using performance measures. The performance measures used are as follows: • Documentation of contracts that are 95% complete or more. • Duration, in days, from issuing Form 830435 to issuing Form 830436. The goal is 90 days, but Iowa DOT currently averages above this, which can be attributed to a few older projects that have taken years to close out. • Average days to process the final packet. A performance measures report is compiled and sent out to the entire department, which helps with accountability in how projects perform and the Iowa DOT staff associated with a project that did not perform well in closing out the project.

Case Examples of Project Closeout 57   Figure 17. Iowa DOT construction project closeout process flowchart (2019).

58 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Figure 18. Iowa DOT financial project closeout process overview flowchart (2019). Continued from page 1 Go back to Attachment A Notes: 1) Vouchers refer to projects paid through the FM account; pay estimates refer to projects where the Contractor is paid directly by the LPA (reimbursement projects). 2) For contracts using the Field Manager software, a revised semi- final voucher must be prepared. 3) See note on Attachment A for explanation of numbers shown at the bottom right of each box. 4) Uploads refers to uploading documents to Doc Express. For projects not utilizing Doc Express, the LPA shall work with the Administering Bureau to determine the best way for transmitting files. Abbreviations: DME = District Materials Engineer (or delegate) FM = Farm-to-Market LPA = Local Public Agency PAP = Project Accounting and Payables LSFE = Local Systems Field Engineer Contractor signs final voucher / pay estimate and uploads all remaining paperwork required for final payment (Day Zero count begins). LSFE approves final voucher / pay estimate, signs Form 830436. Project Engineer reviews, and if acceptable, signs final voucher / pay estimate. DME reviews Form 830436. If acceptable, DME signs Materials I.M. 101 and Form 830436. LSFE forwards final voucher, Form 830436, and the Final Packet to Finance Bureau, PAP. LSFE reviews items in the Final Packet for completeness. Project Engineer prepares Form 830436 and Final Packet as per Attachment F and uploads. LPA makes final payment to Contractor and uploads final reimbursement request. Finance Bureau, PAP processes the final voucher and makes final payment to the Contractor. Admin. Bureau reviews the LPA’s final reimbursement request, and if acceptable, forwards the request, Form 830436, and the Final Packet to the Finance Bureau, PAP. FM project?No 5 5 0 5 52 0 5 5 5 (Total = 155 days) Is the project Federal-aid? LSFE reviews all final paperwork. Yes No 5 Yes LSFE reviews final voucher/pay estimate. 5

Case Examples of Project Closeout 59   Documentation for Project Closeout Documentation for project closeout is a crucial component so that the Forms 830435 and 830436 can be issued and end the project financially. Due to the auditing processes that Iowa DOT uses, documentation is ongoing throughout construction. The district RCE office assem- bles the final packet of documents, which is all electronic documents. Table 20 outlines the documents required for the final payment. Implications of Not Closing Out a Project Implications noted by the Iowa DOT in not timely closing out projects include the nega- tive impact it has on the DOT and contractor relationship, as the contractor wants to be paid in a timely manner. Missing documentation, outstanding claims, and other components not completed prevent the closeout process from proceeding to final payment. For federal aid projects, Iowa DOT staff noted that they have a window to properly close out a project to ensure that the FHWA makes payment on any final costs to a project. As mentioned, if a project has a year to closeout from the official project end date, then the project must be closed in that time period. If it is not, then any funds allocated to the project may be de-obligated and no longer available for a project. The loss of federal funds, or any funds, puts a financial strain on the Iowa DOT to reconcile project costs to another account with another funding source. Processes and Tools for Project Closeout In discussions with the Iowa DOT project closeout staff, they mentioned that the department has modernized its project closeout process. Construction inspectors currently perform work associated with the final audit in real time. This means that as inspections occur, results, reports, quantities, and certifications are prepared at that point in time in the field rather than there being a scramble to find and collect that information at the end of construction. The workload for project closeout is less at the end of a project, as the work is now spread out over the duration of the project. Iowa DOT construction inspectors know that they are preparing for the final audit as the work progresses, keeping the end in mind. In relation to construction inspections, the Iowa DOT has a contractual clause that if contrac- tors  do not provide certifications, then no payment will be made. If all information is not submitted, then the Iowa DOT will not pay for the work. This was instilled after years of spending many days chasing down certifications after project completion in which the contractor has no Document Description Final Construction Pay Estimate Final payment estimate balance report using AASHTOWare Project Field Manager Final Payment (Form 830436) Required form for final payment Certification of Subcontractor Payments (Form 518002) Documentation of prompt pay for all subcontractor work performed Certification of DBE Accomplishment (Form 102116) Documentation denoting meeting DBE obligations Audit of Final Pay Estimate (Form 830301) District RCE audit report Statement of Noncomplying Test of Measurements Tests for any materials in noncompliance with the specifications Interest Payment Information (Form 830235) All interest paid for a project Statement of Salvage Material Any materials not used on the project Summary of City or County Reimbursements for Work Documents for billing local jurisdictions for portions of project costs Table 20. Iowa DOT project closeout documents needed for final payment.

60 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment incentive to provide those certifications or other documents. The Iowa DOT’s “no cert, no pay” policy is an incentive in and of itself. If contractors want payment for their work performed, they need to supply the Iowa DOT all of the project closeout documentation needed. Another component to modernization of project closeout is the establishment and use of e-Construction. The Iowa DOT uses e-Construction throughout the project duration, including closeout. Document sharing, reviewing, and electronic signatures are all a part of the electronic closeout process at the Iowa DOT. Staff at the Iowa DOT noted that most if not all project closeout documentation is now completed electronically, which has saved immense time in the closeout process. The Iowa DOT and the project team have access to all of the project documents electronically, and finding specific project closeout documents or infor- mation is much easier. One example of how e-Construction has impacted project closeout duration mentioned by Iowa DOT staff is gaining official signatures for contract modifica- tions. In years past, it could take a week to gather all of the wet signatures needed for a form. With e-Construction, it can be done in a matter of minutes, as digital signatures are becoming the norm for the Iowa DOT. Document management is much more efficient, which impacts closeout due to the numerous documents needed. The Iowa DOT hires consultants to administer and inspect projects. Consultants fill various roles when the Iowa DOT does not have enough internal staff. Consultants are therefore an extension of Iowa DOT staff and are carrying out responsibilities that impact audits. Consul- tants handling duties related to project closeout are crucial to the project and operate just as internal employees. Factors that Delay Project Closeout The main delay that the Iowa DOT experiences is being able to get all the project closeout information in a timely manner. Additionally, the documentation needs to be complete and accurate. Incomplete or inaccurate information tends to delay closeout, as documents are not processed financially and accounts are not closed. The Finance Bureau then must find and collect incomplete or missing information, and for instances when information is incorrect, details are needed to determine the mistake and correct it. Also, on the financial closeout side, a specific problem associated with missing or incom- plete information is the category report, which is supposed to be included with the final packet for locally funded projects. The category report includes information on the accounts and the funding sources. The accounting unit needs this information to categorize all funding sources to properly account for all expenditures, and without it, financial closeout does not occur. The Iowa DOT has experienced frustrations with long delays in closing out projects due to money issues. Many of the Iowa DOT’s projects that have long project closeout durations center around disagreements on items such as liquidated damages and defective work associated with the punch list. To complicate matters, many times the contractor will stand their ground and will not work to negotiate the situation. When this happens, it becomes very difficult for the Iowa DOT to close a project. Another point made by Iowa DOT construction staff was the inability to have enough staff to close out projects in a timely manner. Some of the Iowa DOT’s resident offices located in the urban areas of Council Bluffs and Sioux City are so swamped with work due to ongoing large Interstate projects that it is difficult to complete audits. When the Iowa DOT has an influx of large and complex projects such as Interstate reconstruction projects, the DOT tends to slow down the closeout process due to limited staff availability to perform that work. However, as these projects near completion and work slows down, these districts will have time to catch up in the near future.

Case Examples of Project Closeout 61   Lessons Learned The Iowa DOT reported the following lessons learned for closing out highway construction projects: • Gain signatures and important documents in a timely manner: Focus on getting required signatures for the 830435 and 830436 forms, as these two forms trigger the closeout process to proceed. The Financial Bureau requires the Form 830435 to begin the financial closeout, and without proper signatures gained in a timely manner, financial closeout is at a standstill. Then, to finalize the project and associated payments, Form 830426 is required and again requires the appropriate signatures. Making sure that signatures are obtained in a timely manner helps move the closeout process along. • Document the closeout process: Iowa DOT staff noted to make sure to document the closeout process and provide succession planning information for future employees and proper knowledge transfer. Although the Iowa DOT has guidance information and a construction manual, specific information on the processes and procedures that each person has in the closeout process can save considerable time in closing out a project. Additionally, if staff has not worked on project closeout for a long time, there is a tendency to forget some of the process. Having the process documented for individual roles helps make project closeout more efficient. • Closeout starts day one of a project: Iowa DOT encourages that project teams begin focusing on project closeout as soon as the project begins. Having the attitude that the audit starts on day one of the project and keeping paperwork up to date helps to ensure that when you reach the end of the project, auditing is mostly complete. Project closeout is then ready to go, and no longer does project staff perform the bulk of the closeout process at the very end of a project. Minnesota Department of Transportation The Minnesota Department of Transportation (Minnesota DOT) conducts project closeout when the contractor requests the engineer to inspect the work once the construction work is complete and corrective work is performed until the engineer is satisfied and issues the letter of project acceptance, which then initiates the generation of the final voucher to close out accounts (Minnesota DOT 2018). Project closeout at the Minnesota DOT functions as two separate but related processes that are divided between the construction and finance divisions. Closeout documentation is collected and prepared by field personnel, which is then submitted to the Central Office of Construction and Innovation. The Central Office checks the documentation and solicits any required revisions from field personnel. Once the Central Office has reviewed and found that the documentation is complete, the information is sent to the Office of Financial Management. This office handles the final finan- cial closeout for state agencies and for projects using FHWA funding. Within Minnesota, road construction projects are administered by both the state (Minnesota DOT) and counties and cities. Those agencies complete their own construction closeout portion of the project, which is then submitted directly to the Office of Financial Management for final financial closeout. For locally funded projects, the process is sequential, with construction closeout completed first and then handed over to the Office of Financial Management (Minnesota DOT 2009). The process has been in place long enough that any questions that finance may have related to the construction phase are handled by the Central Office of Financial Management. Occasionally, construction field personnel are contacted for project information specifics needed to complete the financial closeout.

62 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Minnesota DOT consultant contracts are not well defined enough to have consultants or other third parties handle closeout on projects, so much of the closeout process falls on DOT personnel. On design-build projects, there may be some closeout assistance from the design- build team, but again, much of the closeout process is administered by DOT personnel. Duration to Close Out a Project Within the construction phase of the closeout process, the Minnesota DOT’s goal and perfor- mance measures for tracking project closeout have evolved in recent years. Traditionally, the performance metric for project closeout was not time based or project specific but was the quan- tity of projects not closed out. FHWA has established a new project-specific goal for construc- tion project closeout, which is that each project will be closed out within six months of project acceptance, and the Minnesota DOT is currently progressing to that metric. For the financial element of project closeout, the performance metric used is the percentage of projects that are closed within 3 years of project completion. The goal for this metric is 90% and is specified in a memo of understanding between the Minnesota DOT and FHWA. In recent years, the Minnesota DOT has been very close to sustaining this goal achievement, but staffing challenges have caused some recent slippage. Documentation for Project Closeout The final checklist for Minnesota DOT project closeout is shown in Figure 19. The project closeout documentation needed follows the checklist, requiring each step to be completed for subsequent steps to proceed. The checklist helps the Minnesota DOT make sure that all required documents are collected, reviewed, and approved by the proper authorities. Implications of Not Closing Out a Project The implications of not closing out a project are related to meeting the internal and external closeout objectives. FHWA maintains a list of projects that are inactive but not yet closed out. The Minnesota DOT focuses on minimizing the number of projects on that list. However, what really drives the Minnesota DOT’s efforts to close out projects is the dollar volume of projects not closed out. If more than 2% of the overall project dollar volume is not closed out, FHWA requires remedial action plans so that the Minnesota DOT manages financial project closeout to avoid having to take this action. In terms of the order of financial project closeout, projects are not closed out in a “first in, first out” sequence but rather based on total dollar volume of projects that are not closed out. Because of this, Minnesota DOT gives priority to closing out larger dollar volume projects. Processes and Tools for Project Closeout The Minnesota DOT has implemented some contractor disincentives to encourage compli- ance with project closeout, and it may have had some impact with improving closeout times. They have also implemented AASHTOWare solutions, where contractors submit their payrolls throughout the project. This system may help with collecting the information needed to complete the final checklist. The Minnesota DOT has not implemented e-Construction related to project closeout, so there have not been any recent technology adoptions that would affect the process.

Case Examples of Project Closeout 63   Figure 19. Minnesota DOT project closeout checklist.

64 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Factors that Delay Project Closeout The Minnesota DOT noted the following factors that contribute to delays in closing out projects: Construction • Staffing: Staffing has been a challenge whether it is insufficient staff numbers, turnover in personnel that handle closeout, or lack of staff knowledge/training in the closeout process. Additionally, a reorganization that combined maintenance and construction groups reduced the amount of “downtime” that construction staff had during the winter, which is when closeout work was traditionally performed. • Disputes: Projects with claims or litigation can cause significant delays in project closeout. Projects with warranties can also increase closeout times. • Seasonal Construction: Because Minnesota has a significant winter season, it can delay closing out projects. This has driven the Minnesota DOT to have most projects scheduled to be com- pleted in late spring. Finance • Staffing: Staffing has been a challenge whether it is insufficient staff numbers, turnover in personnel that handle closeout, or lack of staff knowledge/training in the closeout process. • Contract Changes: Changes in the contract may have incorrect coding when changes occur, and this can lead to delays in reconciling final documents. • City- and County-Managed Projects: These smaller entities vary widely in their level of experi- ence with the closeout process, so non-Minnesota DOT-managed projects can be a challenge to close. Lessons Learned The Minnesota DOT reported the following lessons learned for closing out highway construc- tion projects: • Management Priority: At one time, the Minnesota DOT had more than 400 backlogged proj- ects that were not closed out. They are now down to 20 backlogged projects that are not closed out, and most of those are due to ongoing litigation. Management made closeout a priority in response to oversight comments from FHWA, and that motivated people to address the issue. • Touch Everything Once: The Minnesota DOT’s Office of Construction and Innovation has stressed that the pieces of the closeout process do not occur just at the end of the project. Forms and certifications happen throughout the project lifecycle. If this information is collected and processed correctly throughout the process, everything is simplified at the end (i.e., it is touched only once). One interviewee, in relation to approving material throughout the project lifecycle, noted, “Approval is not an exercise in clicking.” The goal should be to do everything right the first time or correct it immediately. Ohio Department of Transportation The Ohio Department of Transportation (Ohio DOT) is in the process of adopting a new project system that will automate many of the project closeout steps and processes as well as send out notifications to keep the closeout process moving forward. The system shows much promise in streamlining the closeout process to become more efficient and take less time to complete. The finalization system, which is to be fully implemented statewide soon, is more proactive and incentivizing to get the work done and keep it moving forward efficiently and without delays.

Case Examples of Project Closeout 65   Project closeout at Ohio DOT, which refers to project closeout as project finalization, is defined as the process that begins once construction work is complete to finalize the contract by gaining acceptance of the project from all participating agencies, determining the final value of the contract, completing all remaining contract requirements, and issuing a final change order that then ultimately leads to the final payment and release of the contractor from further responsibility for the project (Ohio DOT 2017). Completing the closeout process involves the district construction offices that handle the project and field closeout. Then, the Office of Project Accounting works with the construction team to close out the accounting and finances of a project. Along with these internal DOT offices, external stakeholders involved in project closeout include the general contractor, FHWA for projects funded with federal aid, construc- tion and program managers if included, and suppliers and vendors. The Ohio DOT uses a “finaling as you go” approach so that closeout work is occurring as the work progresses. Highway construction project closeout officially begins on the construction side once all construction work is completed, called physical work completed, and the contractor notifies the Ohio DOT project engineer for final inspection. If the project engineer is satisfied with the contractor’s notification of completing work, then the final inspection occurs no more than 10 days after notification. The final inspection is performed to relieve the contractor of their responsibilities of work per the contract and from any bonding requirements. Therefore, all contract work must be installed and completed prior to notifying Ohio DOT for final inspec- tion. The final inspection is a limited visual review of the work and serves as verification that the work is substantially complete. The district final inspector performing the inspection then categorizes the work as either (1) unacceptable or not complete, (2) substantially complete with punch list items found by final inspector, or (3) substantially complete. The final inspector then issues a final inspection report that documents the findings of the inspection and begins any warranty periods for the project and a punch list of work required to be completed as a condi- tion of project acceptance. The punch list stipulates a reasonable amount of time to complete the items, and if a contractor fails to complete the items by the time stipulated, liquidated damages can be assessed to the contractor (Ohio DOT 2017). The Ohio DOT project engineer is responsible for determining and preparing documenta- tion for the final quantities for payment for every work item included in the contracted work. This information is then passed on to the district office to perform a final audit. The audit is performed to verify the final quantities and ensure that documentation supporting the quanti- ties exists (Ohio DOT 2017). Ohio DOT staff said that they encourage the construction team to work on auditing as work progresses to avoid having to do the bulk of that work at the end of a project. Once the contractor is notified and agrees within 30 days with the final quantities, the district construction office finalizes any price adjustment and generates the final change order for the project. Then, the district construction office develops and approves the final estimate for the project. The final payment is then determined using the agreed-upon final quantities that are generated with a final quantities report, the findings of the final inspection, along with receiving all required finalization documents and contractor certifications that the work was performed in accordance with the contract (Ohio DOT 2017). The Office of Project Accounting then generates the final payment once all requirements are met, including finan- cial project closeout, and the FHWA final voucher is issued. The District Planning Department is involved in the beginning of the closeout process, and they work with the project coordinator and project manager to make sure all sections involved in the project, such as real estate, consultant contracts, and environmental group, have completed their work functions. Once the project administrator confirms with the dif- ferent internal sections involved in the project, then the Ohio DOT releases all encumbrances and purchase orders.

66 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Once the project is accepted by the District Planning, Engineering, and Construction Depart- ments, closeout is handed off to the Finance office within the Division of Finance & Forecasting, and the financial closeout process begins. The final estimate is uploaded to the shared file system at the Ohio DOT, and a closeout notification is sent to the project accounting unit signaling that a project is ready for closeout (Ohio DOT 2017). Ohio DOT staff pull all information associ- ated with that project and all of the vouchers that are needed and separate all costs into the different funding groups, depending on the funding source or sources used on a project. Next, the accounting unit performs an initial workup on how the project was supposed to be paid compared with how it was actually paid. Once that workup is complete, a final reviewer in the finance and accounting office checks the work for completeness and accuracy and then makes any necessary adjustments to add or subtract funds in the FHWA FMIS. After reconciling all costs, any monies due back or owed from local entities are reviewed and processed. Finally, a FMIS modifier is used to close out the federal fund obligations, the accounting unit closes the project in all Ohio DOT systems, and project information is archived. Although this process described focuses on federal funding, projects that use local funds follow a similar process. When federal or local money is used, finance reviews all pay items and payments made and checks every line of coding to make sure it is appropriate. Federally and locally funded projects follow the same process. However, the finance unit does not reconcile state-funded projects, as finance relies on the districts to perform this. Duration to Close Out a Project The goal at the Ohio DOT for closing out a project is 180 days for at least 90% of its projects (Ohio DOT 2017). However, the department recently modified the measure to be an incentive/ points-based system. Prior to the modification, no matter the complexity or size of a project, all projects were to be closed out in 180 days. The Ohio DOT mentioned that for projects that only had a few pay items, closing out a project in 180 days was achievable, but for large and complex projects that may have hundreds of pay items, closing out a project in 180 days was very difficult to achieve. Also, it was an all-or-nothing system, meaning a project closed out in 181 days was considered a failure. The new incentive system is based on the size of the project in terms of the number of pay items on a project from the final quantity and materials perspective. The Ohio DOT has a scale of project size and number of pay items, which is as follows: • Small projects: 0–50 pay items • Medium projects: 51–250 pay items • Large projects: 251–500 pay items • Mega projects: more than 500 pay items The way the system works is that the quicker the project is done from a finalization perspec- tive, the higher the score a project gets. The average duration is 180 days, which equals a score of 3. If a project is closed out in a very quick fashion, the project has the ability to get a score of 5. Long durations for project closeout leave a project subjected to receiving a score as low as -3. All of the project closeout duration scores in each district are compiled and averaged to show that achieving timely project closeout is possible and that the low- and negative- score projects affect the projects with high scores and show employees that everyone’s work is important regardless of the position or project a person is working on. Documentation for Project Closeout Project closeout, or finalization, at the Ohio DOT requires many different documents that are reviewed, completed, and signed. Documentation consists of the properly recorded information

Case Examples of Project Closeout 67   needed to verify quantities and the quality of the work put in place. In order to keep up with documentation and not run into having to complete or track down documents during the project closeout phase, the Ohio DOT specifies that documentation should be created as the construction progresses. Table 21 outlines project finalization documents required for closeout on Ohio DOT highway projects. The contractor has 60 days to supply all necessary documents to the Ohio DOT. The depart- ment provides another 30 days beyond the 60 days as a last resort. Then, if documents are not submitted within 90 days, the department charges an administrative fee of $100 per day for every day that the documents are delinquent (Ohio DOT 2017). Documentation plays a key role in final payment on projects funded with federal aid or state funds. The requirements for payment on projects using federal or state funds are as follows: • Final quantities are determined and validated according to the project specifications and any necessary documents such as material weight tickets, measurements, and calculations that are provided with the final packet. • The work is completed in conformance with the contract, which requires three document items: justification for the quantity of completed work, documentation that work was constructed in agreement with the contract, and documentation that the material incorpo- rated into the project is in accordance with the contract. Implications of Not Closing Out a Project With the new system being implemented at the Ohio DOT, the project closeout process is becoming more efficient, meaning that some of the implications of not closing out a project in a timely manner at the department, such as the reduction in the number of projects that can be completed annually and the inability to release federal funds to use on other projects, are reduced. However, before the new system and discussions began on improving the project Document Description Audit District office audit of materials and quantities Final Acceptance Letter generated advising contractor of final value, release of contract obligations, and formal acceptance of the project Final Quantities Final quantities report documenting the final quantities for all pay items and supporting documents Final Estimate Letter (Form C-85-Final Letter) Reconciliation of payment to the agreed-upon final quantities Report of Punch list Completion (Form C-85-Punch list) Any corrective work performed after substantial completion that has been approved Final Inspection Report (Form C-85-Final) Report outlining the results of the district final inspection of work Contract Compliance Certifications (Form CA-D-12) Contractor acknowledges that all work is complete in accordance with the contract Material Certifications Approvals for all materials used Payroll Wage Certifications Used on state project only DBE Affidavits Documentation of DBE goals achieved on a project Non-Specified Materials Affidavit Documentation justifying the use of non-specified materials, if applicable Receiving Ticket for Salvaged Materials Documentation for any materials deemed as salvageable at the end of the project Force Account Records Documentation for any force account work, if applicable Source: Ohio DOT (2017). Table 21. Finalization documents required for closeout at the Ohio DOT.

68 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment closeout process 2 years ago, project closeout on the financial side experienced difficult con- versations about funds on projects years after they were closed. In an example provided by Ohio DOT financial staff, several years ago, when the Ohio DOT had a large backlog of projects to closeout, department staff had to have the difficult conversations with some local entities that, although a project has been closed for 4 to 5 years, the Ohio DOT is invoicing the local entity for work that was completed years prior, and they need to pay for it. Ohio DOT staff said that these were difficult conversations, and the finance staff does not want to have those conversations again. The Ohio DOT realized that gaining goodwill and partnering with local entities is very important to project success, and coming back to entities years later breaks down that partnership. Not closing out a project in an efficient amount of time also impacts resources at the Ohio DOT. When the finalization process does not progress timely, staff are then tied to a project longer than they should be. Also, the loss of knowledge, with people moving on to other projects and responsibilities and others trying to remember things that happened many months prior, can be costly. The result of using staff on a project longer than anticipated and the loss of knowl- edge add extra costs to a project that should not have occurred. Processes and Tools for Project Closeout Closing out highway projects at the Ohio DOT starts while the project is still progressing. By focusing closeout effort during construction, it makes it easier to resolve quantity and material issues as the work is being completed versus waiting until the end of a project and trying to go back in time and recreate the situation. The Ohio DOT construction team works on closeout during construction, focusing on final quantities and materials and being timely on change order processing, especially for adjustment change orders to original contract items. Along with performing closeout tasks during construction, the Ohio DOT creates internal reports every two weeks that help project teams keep tabs on confirming materials and quantities not only for project closeout but also for making timely progress and final payments to the contractor. A recent two-year process has led to the advent of a more proactive and automated project closeout system. The new system, in which some resources have already been rolled out while the full system will be implemented in the next year, has the project workflow built in. The new system includes the different closeout components along with electronic signoff. Notifications and access to the system are available to a variety of people in each district so that the process keeps flowing forward. The Ohio DOT realizes that the new system will make them more effi- cient throughout a project, which makes closeout more efficient as well. All Ohio DOT districts have a finalization goal to achieve, which is tied to the incentive- based project closeout duration score. Because the scores are compiled and averaged in each district, the goal is jointly pursued in each district and statewide. For finance, performance is measured based on the number of projects listed as inactive in the FHWA inactive list. Also, to encourage prompt closeout, the project closeout performance measures are a part of Ohio DOT staff performance evaluations. Ohio DOT staff mentioned that by incentivizing the performance measure associated with project closeout, employees are more in tune with constantly pursuing timely closeout so that it positively impacts their annual performance reviews. As Ohio DOT construction staff stated, performance measures mean more to achieve when tied to individual performance. The Ohio DOT uses consultants to fill in for staffing needs on highway construction projects. Because consultants are hired and involved with construction, performing duties the same as internal DOT employees, consultants are involved with project closeout. In the construction field, consultant construction inspectors are expected to perform the same as internal employees

Case Examples of Project Closeout 69   when it comes to finalizing quantities and agreeing with contractors. Consultants are also now engaged in the material approval process. For project closeout training, the Ohio DOT uses succession planning to make sure it has the right people on the job and to expand the knowledge base of the people involved with financial closeout processes. The Ohio DOT has more flexibility than before, when one person was responsible for certain tasks themselves, so that the knowledge base has grown within the department. The current core group of individuals within finance now have the knowledge spread around to several individuals so that if one person is unavailable, someone else can step in to take care of the situation. The importance of knowledge management and transfer was not to be understated, as Ohio DOT staff noted the great importance of knowing how to close out a project, and not only correctly, but in a timely manner. The Ohio DOT initiated the use of e-Construction several years ago, which has impacted the project closeout process. One part of e-Construction was a move to an electronic pay- ment system, which Ohio DOT construction staff noted saved significant amounts of time and paper. The labor information for a project is now readily available and staff can search to find the information needed relatively easily. In addition, acceptance and associated paper-based signatures used to be the only method accepted for signing off on final acceptance, but with e-Construction, e-mails can now suffice as acceptance. Interestingly, the Ohio DOT mentioned that some of the forms used with e-Construction-based project closeout were developed many years ago but are only now commonly used due to their effectiveness in closing out projects electronically. Document sharing has helped to remove some potential errors in calculations when rectifying quantities and materials as well as made it easier to find information at any time. Furthermore, electronic and typed documents are easier to use and read over handwritten or scanned docu- ments. The Ohio DOT noted that e-Construction has been a time saver for their project closeout processes. Factors that Delay Project Closeout On the construction side, the Ohio DOT mentioned several items that have occurred that lead to delays in project closeout. They are as follows: • Project staff are constantly negotiating with contractors toward the end of the job and trying to agree on final quantities and rectifying materials. This finalization of quantities and materials can drag out in some cases, especially if the quantities from the DOT and the contractor do not match. • Resolving payroll and prevailing wage issues associated with construction labor, although easier now with the use of the electronic payroll system, delays project closeout to figure out any discrepancies or corrections needed. • Gathering agreements from local entities that have some involvement in the project takes time in some cases, as the urgency is not there for local entities. • Each district has 25% of its projects randomly picked to be fully audited. The full audit is then a part of the finalization process for construction, which, depending on the records, can take considerable time to complete, delaying project closeout. • There could be a DBE issue that comes up that might slow down the handoff of that project on to the planning department. • Collecting documents and agreements from the contractor takes time. When contractors are bogged down with a lot of work, the Ohio DOT has noticed that there is less urgency from the contractor to complete a project, which leads to more time needed to get all the necessary documents from the contractor for the finalization process.

70 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment From the finance side, a delay mentioned in project closeout is getting invoices for work from the railroads, and sometimes the local utilities, involved in a project. Ohio DOT staff noted that the railroads in Ohio tend to take their time to invoice for work. So, in instances when a project has been closed out with successful completion from construction and a successful district review of a project and an invoice comes in from a railroad or a utility, project accounts will need to be reopened or figure out another way to pay the invoice, which makes things much more difficult than if the invoice was submitted in a timely manner. Also, from the financial closeout perspective, the review process is tedious and time consuming due to all the information and details to look through, although Ohio DOT employees know that it is necessary. Information for project closeout comes from multiple internal systems, and trying to reconcile all that information with the costs involved in a project takes a lot of time regardless of the type and size of a project. Adjustments are made, and sometimes mistakes occur, which is why multiple checks are necessary, but this all takes time to complete. The Ohio DOT views project closeout as a comprehensive and complicated process that is slightly different for every project since every project is different. However, as the Ohio DOT mentioned, the new project closeout system that is being implemented was designed to alleviate some of the tediousness and time needed to complete project closeout. Lessons Learned The Ohio DOT reported the following lessons learned for closing out highway construction projects: • Be proactive and incentivize staff: With the development and initiation of the new closeout system, the Ohio DOT is realizing that it is better to be proactive for project closeout with accountability and incentivization being a part of the process. By incentivizing staff based on the project closeout performance measures, Ohio DOT staff put forth efforts to be proactive in completing project closeout processes, which they then know will positively impact their individual performance review. • Understand the process and people involved: When the Ohio DOT began reviewing its closeout processes a few years ago, some internal employees found that although they thought they were doing a good job, closeout was taking way too long to accomplish. Therefore, the depart- ment went through and reviewed the process with all project closeout staff so that everyone understood the importance of the process and the role and responsibilities that each indi- vidual played in the closeout process. This has helped the Ohio DOT develop the new system based around process improvement, accountability, and incentives as well as shown indi- viduals the importance of what they do for closing out a highway construction project. • Have executive leadership support: Ohio DOT staff acknowledged that the discussions and development of improvement for project closeout would not have happened without the support of the director, the assistant directors, the 12 district deputy directors, and the 15 central office deputy directors. Buy-in from the top has provided the Ohio DOT with the ability to get consistent messages out and to roll out the process statewide. Executive leadership showed the importance of making improvements, which resonates with the staff performing the work knowing that management supports what they do. Oregon Department of Transportation The Oregon Department of Transportation (Oregon DOT) uses a formal process to close out highway construction projects, which is defined as the phase when the final inspection occurs once construction contract work is complete to denote any deficiencies that are to be corrected

Case Examples of Project Closeout 71   prior to providing final acceptance, which is the point when the department accepts all contract work, releases the contractor from the contract, and proceeds with closing out the financial aspects of the project (Oregon DOT 2021). The process incorporates the region construction offices and contract administration at the DOT headquarters as well as programming and funding. The external stakeholders involved in closeout for Oregon DOT highway construc- tion projects include the general contractor, the FHWA for projects funded with federal aid, local entities and utilities, and the railroads. Table 22 shows the construction closeout process used at the Oregon DOT from the resident engineer’s closeout checklist (Oregon DOT 2017). Project closeout begins to take shape when a highway construction project is 50–75% com- plete or when the Oregon DOT resident engineer determines that the project is closing in on completion. Once the project is nearly complete, a review of the project takes place with DOT representatives and the contractor to identify construction or material deficiencies that need to be corrected to assure that the final product will function properly and that no improper materials or construction were used. The Oregon DOT works with the contractor to develop punch lists for all cleanup and repair work that will need to be accomplished. Then, when all on-site work has been completed as defined by the contract, the Oregon DOT resident engineer prepares the semi-final package for submission and review by the construction contract unit, schedules the final project review with the regional assurance specialist (RAS), and issues the Second Notification to the contractor. The Oregon DOT uses a notification system, which includes the First Notification for when the contractor begins on-site work, Second Notification for completion of on-site work, and Third Notification issued when all corrected work is completed and required documents are received from the contractor (Oregon DOT 2017). After issuance of the Second Notification, the Oregon DOT resident engineer reviews the project within 15 days of being notified by the contractor that all work is complete. If the resident Resident Engineer Checklist – Project Closeout Steps The Resident Engineer (RE) will work with the Contractor to develop punch lists or other means to assure that all cleanup and repair work is completed. If the Contractor notifies the RE that all work, including punch list work, is complete, the RE must review the project and notify the Contractor of any remaining work within 15 days of the Contractor’s notification. If the project includes landscaping that must go through an establishment period, the RE must assure that the establishment work is properly accomplished and that payment for that work is made. The RE must notify the applicable resources for projects that are designated Full Federal Oversight, National Bridge Inventory Structures, Culverts 72 inches or larger, a Coating Warranty, or Stormwater Control Facilities. When the Contractor has completed all work on the project, the RE and Area Manager (AM) must recommend acceptance of the project. The RE must initiate the recommendation either by preparing a memo or by completing and distributing a Recommendation of Project Acceptance. The RE must compile all required project documentation, assure that both the Region Assurance Specialist (RAS) and Office of Civil Rights (OCR) Field Coordinator have reviewed the documentation as required, and submit the final project documentation, along with the Recommendation of Acceptance on the Documentation Review Report, to the Contract Administration Unit (CAU). When the Contractor has performed all work and other requirements as specified in Subsection 00150.90(b) of the contract, the RE must issue Third Notification. If the Contractor disagrees with the final quantities or payment amounts, the disagreement will be resolved as specified in Subsection 00195.95. The RE must submit notification that all State Force Order (SFO) work and Right-of-Way (ROW) Monumentation are complete to the CAU. Table 22. Oregon DOT checklist used for construction project closeout.

72 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment engineer and RAS determine that all contract work has been fulfilled and obligations concerning project documentation are met, then the area manager and resident engineer provide accep- tance of the project using the recommendation of project acceptance form that is then issued to the contractor. After final acceptance, the contractor or the Oregon DOT resident engineer may request a Post-Construction Review meeting to examine the project for possible process improvements that may benefit future projects (Oregon DOT 2017). When the construction work is accepted as completed, an expenditures account end date letter along with the reviewed final package of documents is sent from the construction unit to the program and funding office noting that the contract is complete. This initiates the financial closeout process. For federal aid projects, the final voucher process involves reconciling the funding for the line items used in the bid between participating and nonparticipating items. This then helps the Oregon DOT denote the funding responsibilities for all cost items for a project, which include 30 to 40 funding responsibilities that show which Oregon DOT program (e.g., Environmental, Bridge or ROW) is responsible for the expenditures. Typically, funding responsibilities are split up using percentages, such as 20% being the funding responsibility of the bridge department, 30% being for preservation, and so on. In cases when a project spends less than originally obligated, credits are to be determined. With funding responsibilities based on percentages, the percentages dictate the amount that a funding responsibility receives as a credit. When local funds are involved in a project that adds another step to the project, an itemized statement would need to be developed to show the credit or to show what the local agency owes the DOT. Oregon DOT noted that project closeout is similar for projects that use federal or state/local funds, but the steps may be different. State and local funding may need itemized statements for reconciling expenses, whereas federally funded projects require the use of the FMIS system. Additionally, final acceptance for projects using local or state funds is to include acceptance by the Oregon DOT but also a letter from the local agency stating that it accepts the project as being complete. Duration to Close Out a Project With receipt of the account end date letter from the construction contract unit, the program and funding unit assigns end dates to the expenditure accounts for three months from receiving the letter. At the end of the three months of closing expenditure accounts, the final voucher is created for projects involving federal funding. At the Oregon DOT, project closeout metrics are used for project closeout, in which all the measures are time based. One of the metrics on the construction side of closeout is to take no more than 120 days to get from issuing the Second Notification to issuing the Third Notification. Currently, some of the more rural Oregon DOT regions meet the 120-day goal on their projects, whereas the regions that include large population centers are trending to close in more than 120 days. Reasons for the differences are geared towards the fact that urban areas tend to have more and larger projects than rural areas, and regions in urban areas may not have sufficient staff to perform closeout in a timely manner. Each project is tracked for the number of days that it takes to get from the second to the third notification. Then, every few months, a report compiles the amount of days for recent projects. To encourage improving the time needed to get from the second to third notification, the contract administration unit releases a top 10 most wanted list that shows the projects that performed the worst in the number of days to complete the closeout. This has resulted in region

Case Examples of Project Closeout 73   construction units discussing with the contract administration unit about these projects and what they can do to improve their closeout processes for future projects. For financial closeout, the major measure is to not use more than 90 days to get from closing out expenditure accounts to submitting the final voucher to the FHWA. If the 90  days is exceeded, FHWA may not reimburse for final expenditures, which will require those costs to be reimbursed by other funding sources. In addition, the Oregon DOT measures the time required from the project completion end date to final voucher completion, with a goal of no more than 15 months to complete all financial closing. Documentation for Project Closeout The Oregon DOT uses a process for the submittal of final project documentation, which is outlined in the Oregon DOT construction manual. The Oregon DOT requires their resident engineers for highway projects to ensure project documentation is occurring as project work is progressing so that documentation is not left until the last portion of the project. During construction, the Oregon DOT resident engineer along with the region assurance specialist (RAS) and the Office of Civil Rights field coordinator periodically review the project docu- mentation to note any discrepancies or missing documents so that issues are addressed at the moment rather than there being a scramble to find and collect the information at the end of a project. For documentation on the construction closeout side, the Oregon DOT resident engi- neer is required to • Compile all original and supporting data for the final quality, quantity, and labor compliance documentation; • Update the “corrected estimate quantity amount” to match the “performed to date quantity amount” in the contract payment system; • Prepare documents for the semi-final package; • Schedule with the RAS a final project reviewing the remaining items necessary, including the release of any retainage, and confirming the contents of the final package; • Sign off on the final Document Review Report (DRR); and • Forward the semi-final package to the construction contract unit for review. The semi-final package includes the necessary documents for construction and finance of the project. Table 23 summarizes Oregon DOT closeout documentation. Implications of Not Closing Out a Project One example provided by Oregon DOT staff regarding implications for not closing out a project is the delays associated with the project and closeout as well as changes in project personnel. If issues arise during closeout and there is an extended period of time between the completion of work and preparing the closeout voucher, any discrepancies that are noticed can be difficult to explain, as no one remembers what happened, or that particular person or persons are no longer involved in the project. When there is a lack of knowledge in remembering what a charged expense is for or why that charge is there, it can lead to overdraws on accounts since they are left open. Then, the FHWA may refuse to reimburse remaining expenses, which then requires local or state funding sources to be responsible for expenditures that were originally federally eligible. Although refusal to reimburse has impacted the Oregon DOT and project closeout, this is a situation that rarely occurs. Another point made about not closing out a project timely is the inability to shift funds to other projects or work. Oregon DOT staff mentioned that when closeout of a project results in

74 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment savings, they allocate the funding to other work or projects to cover potential cost overruns and to initiate additional work. Closing out projects in a timely manner helps to find savings and to avoid overruns as well as providing funding flexibility. Processes and Tools for Project Closeout The Oregon DOT holds contract administration workshops for their employees and consul- tants, which includes training for the documentation requirements of a project. The training involves understanding the necessary documents, processes for collecting all needed documents as the work progresses, and the procedures to work with the RAS and field quality control Document Description Semi-Final Documentation Checklist (Form 734-2706) Transmittal letter identifying all documents submitted to the RAS Documentation Review Report (DRR) (Form 734-1903) The RAS completes this form after reviewing and accepting the project documentation Documentation Review Report Supporting Documentation: RE Exception Explanation (Form 734- 2704) Required when using a different method to accept the materials installed on a project Final Materials Certification (Form 734-1979) Lists all quality-related price adjustments Foreign Steel Summary – Form 734- 1968 List of all foreign steel materials used on a project Quantity Ledger Report Quantities, unit prices, and pay amounts for materials used on the project Preliminary Progress Payment Report Schedule of values report Order for Force Work (State Force Order) Notification of Completion Email notification, required even if not used on a project Right of Way (ROW) Monumentation Completion Notice Email notification, required even if ROW not part of a project Resident Engineers Narrative Form (Form 734-2756) Provides constructive feedback to Oregon DOT and external parties on improvements needed that are incorporated into future projects Recommendation of Project Acceptance (Form 734-1384) Denotes whether Oregon DOT deems the project ready for acceptance Local Agency Letter of Acceptance When using local funding on a project, local entity must submit a letter of acceptance Price Adjustments (Quality and Quantity Price Adjustments) All price adjustment calculations and related correspondence Test Summaries Compilation of all test summary forms, including final quantities, signatures of reviewers, and dates reviewed Project Quality Control Documentation Includes quality control technician certifications and all random numbers generated for the project Quality Documentation Field-tested and non-field-tested documentation and supporting information Quantity Documentation All supporting and source documents used to determine final quantities General Daily Progress Reports/Resident Engineers Diary All Daily Progress Reports (Form 734-3474) and Resident Engineer’s Diaries (Form 734-3120) for all personnel that worked on the project Labor Compliance Includes certified payrolls and wage certification statements; employee interview reports; Resident Engineer’s Labor Compliance Certification (Form 734-1734) Traffic Control Inspection Reports (Form 734-2474) All traffic control inspection reports completed during construction Erosion and Sediment Control Monitoring (Form 734-2361) All erosion and sediment control reports completed during construction As-Constructed Plans Documented changes made to the contract plans during construction of the project Warranties and Guarantees If applicable, forward all warranties and guarantees to the Office of Maintenance Table 23. Oregon DOT project closeout documentation.

Case Examples of Project Closeout 75   personnel. In addition, the Oregon DOT conducts quarterly region assurance specialist meet- ings, which allows Oregon DOT personnel to discuss and bring up issues associated with construction, including project closeout. The training and meetings allow for employees to better understand the project closeout process and to improve the processes. For Oregon DOT to improve the closeout process, the document review report escalation process was created. This process provides a proactive approach to collect and review project documentation at earlier stages of construction. The RAS follows this process as they perform their quality and quantity reviews. Upon Second Notification, the documentation review report turns into an action plan in which timelines are established for the RAS reviews along with the personnel responsible for resolving the pending issues. The Oregon DOT implemented the use of e-Construction through an initiative, which is used throughout the duration of the project, including project closeout. The use of e-Construction and Doc Express has helped the Oregon DOT become more efficient in their closeout processes, as e-Construction is used to share electronic closeout documents with the project stakeholders, which can also review and sign documents electronically. All project closeout documents are now located in one place, making it easier to find and more transparent in communicating the information for a project, and there are no more excuses such as, “I gave that document to you,” since either the document is found electronically or it is not. As the Oregon DOT construction manual states, electronic documentation is required for all projects unless otherwise approved by the construction and materials engineer. This means that project closeout must use electronic documentation unless a project gains special approval. Factors that Delay Project Closeout When documentation is missing, incorrect, or incomplete, the construction side of closeout can be delayed. The documents that are commonly missing or take time to obtain are material test results and certifications. More stakeholders are needed to be involved when missing a field test that cannot be tracked down or in some cases the field test never occurred. The Oregon DOT then must issue a resident engineer’s exception, which involves technical resources and the professional of record (POR), which may become a lengthy and time-consuming correspon- dence. Also, the Oregon DOT is then potentially at risk of non-federal participation. Missing documentation issues can be a lengthy and more involved process that comes up right at the end of a project. To overcome this, Oregon DOT resident engineers review project documentation throughout the project so that instances of missed tests can be taken care of at the point that they arise. One portion of project closeout documentation that Oregon DOT staff noted seems to take more effort and time to complete is the labor compliance for the project. Labor hours and costs are pertinent to closing out the project accounts, so Oregon DOT reconciles all project labor. Labor compliance impacts the quality and quantity components of closeout, and therefore, there are multiple offices and individuals within Oregon DOT that sign off on labor compliance. All of this can take time to complete, and when any labor compliance documents are missing or incomplete, such as certified payroll statements, wage certification statements, or employee interview reports, the project team needs to find the information that can take time if labor was not tracked appropriately during construction. Another area that delays project closeout at the Oregon DOT is dealing with local entities. When the program and funding unit does not receive validation from the local entities for completion of a project, the financial closeout does not occur. Even if the program and funding unit knows that there is a completed locally funded project, until the local entity provides

76 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment notification that the work is completed and accepted, the program and funding unit is unable to move forward. Other issues with local entities include disagreements with the final costs, which can extend the project closeout time to allow for the final amounts to be negotiated and agreed upon by both the DOT and the local entity. This negotiation tends to take time that adds to the closeout duration. Lessons Learned The Oregon DOT reported the following lessons learned for closing out highway construc- tion projects: • Be aware of the time needed to closeout a project: The Oregon DOT requires many documents and reports for project closeout. Staying on top of the reports needed and documents required helps keep the project closeout duration within the timeframe expected for a project. • Have dedicated staff for project closeout: The Oregon DOT currently has staff members that handle the financial project closeout processes for highway projects. By having dedicated personnel, the Oregon DOT has been able to catch up on their delayed closeouts and have closed out the majority of their projects in a timely fashion. • Create an atmosphere of urgency: Oregon DOT personnel noted that once they accept a project, the sense among Oregon DOT employees is that the project is complete. Then, the project closeout process seems to slow down and lose any sense of urgency to complete closeout in a timely manner. Following the proper processes for project closeout, along with understanding that the project is not “complete” until all documentation is collected and accounts are finalized and closed out, helps the Oregon DOT instill more urgency to complete closeout in a timely fashion. Texas Department of Transportation As with many DOTs, the closeout process at the Texas Department of Transportation (Texas DOT) is a sequential process between the Construction Division and the Finance Division. The Texas DOT’s policy is that the construction phase of the closeout processes must be completed before the financial closeout can begin. The Texas DOT’s procedures for closing out department construction projects within the construction phase are contained within the Construction Contract Administration Manual (Texas DOT 2020). This manual defines project closeout as “the process of collecting all paper- work required to be submitted over the life of the project, to support pay quantities and to support the decisions made during the life of the project. The information contained in this documentation may be needed in the future if a claim or lawsuit is filed. This is a two-step process, beginning with project record keepers in the Area Office (AO) and finished by the District Construction Office (DCO).” The Texas DOT provides separate project closeout resources for projects that are executed by local governments under the oversight of the department. Closeout procedures for local govern- ments are described in the Texas DOT’s Local Government Projects Policy Manual (2019) and the Local Government Project Management Guide (2015). Figure 20 provides an overview of the closeout process for local governments. The Texas DOT developed these resources to provide a uniform construction closeout process across local government entities to make it easier for the department’s Office of Finance to close out local government projects. The Texas DOT has dedicated a significant amount of time to train employees within the Finance Division to close out construction projects. When an employee first joins the group,

Case Examples of Project Closeout 77   they are given a high-level overview training (1–2 weeks), and then they transition to specific training based on their assignment. The job-specific training is one-on-one mentoring and continues for an extended period of time based on the specific job assignment. This is necessary because the Texas DOT’s closeout process is unique to the Texas DOT, so all employees receive training in the process. Duration to Close Out a Project The Texas DOT’s performance metric for tracking closeout performance is the number of projects that are not closed. The FHWA mandates that project volume awaiting closeout should not exceed 2% of the overall project volume. The Texas DOT also monitors the FHWA inactive list to minimize the number of projects on the list. Additionally, as a result of a Texas state audit, projects that are inactive for 90 days are expected to be closed out. With recent emphasis over the past five 5 years, the Texas DOT has been achieving these goals consistently. Figure 20. Texas DOT project closeout process (2019). Project Close-Out and Maintenance FH W A Ac tio ns Tx DO T Ac tio ns LG A cti on s Construction Ensure ROW/utility relocation documentation complete DBE compliance – final form to TxDOT LG finalize records and provides access to TxDOT Required record retention TxDOT performs records review Reconcile finances (actuals from financial management system) Prepare statement of cost1 Complete FHWA Form PR-20 Return files to LG, if necessary Required record retention FHWA final audit Request final reimbursement from FHWA Project Closed NOTES: 1. Three courses of action can result. - No financial transaction if costs are even with estimates. - Issue refund to LG if costs are below estimates. - Request additional funds from LG if costs are above estimates. FHWA approve? No Yes Disposal of excess property Disposal of excess propertyNon-Construction

78 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment Documentation for Project Closeout The Texas DOT’s Construction Contract Administration Manual (2020) provides a checklist for the required project closeout. The checklist is shown in Figure 21. Implications of Not Closing Out a Project The impact of delayed project closeout at the Texas DOT is related more to perception than to financial constraints. A great deal of attention is paid by the Texas DOT to the FHWA inactive list and the total dollar volume of projects not closed out. This encourages Texas DOT staff to remain diligent in closing out projects. Processes and Tools for Project Closeout Several years ago, the Texas DOT adopted an internet-based electronic document manage- ment system to transition the closeout process from a paper-based storage system to an elec- tronic storage system. The Texas DOT selected a commercial “off-the-shelf” system (Oracle’s PeopleSoft). The decision to use a standard “off-the-shelf” software system with little customiza- tion was made to ensure that the process could be adopted quickly across the Texas DOT. The department was able to implement PeopleSoft in 17 months. The biggest challenge with this conversion was converting the data from the old system to the new system. The Texas DOT is currently working to improve the final voucher process. The goal of this improved system will be to automatically generate final vouchers from systems that are currently updated as part of the project execution phase. The current process is electronic but not auto- mated (current voucher shown in Figure 22). The goal is that the final voucher would be gener- ated automatically and then reviewed and approved by Texas DOT staff. Factors that Delay Project Closeout The Texas DOT noted the following factors that delay project closeout: • Contractor Refunds: If a project requires a contractor refund, this delays the processing of the final voucher. Without a final voucher, a project cannot be closed out. • Projects Involving Oversight Stakeholders other than the Texas DOT: Local governments execute a significant number of projects under the guidance of the Texas DOT. Due to the wide variations in human resources at these organizations, the level of familiarity with Texas DOT’s closeout process can vary. Projects involving third-party vendors (e.g., railroads, utilities) often experience delays in getting billing documentation submitted, which delays the closeout process. State-funded projects (i.e., no federal funding) are the quickest projects to close out. Lessons Learned The Texas DOT reported the following lessons learned for closing out highway construction projects: • Management Emphasis: Management emphasizing the importance of project closeout goes a long way toward improving the closeout processes. Additionally, the Texas DOT inter- viewees mentioned that they wished they had emphasized to field personnel the impacts of not closing out projects earlier in their closeout process improvement efforts, and that would have led to earlier stakeholder buy-in.

Letting Award Execution Preconstruction Safety Meeting Preconstruction Meeting Work Begin Time Suspensions Time Suspensions Milestone Dates Substantial Completion Project Acceptance Final Estimate Other Important Dates Subcontract Agreements Purchase Orders Monthly/Final Progress report Goal shortfall explanations Baseline Schedule Monthly Updates Notice of Potential Time Impact Time Impact Analysis Sources Materials Lists Matl Test Document/Deficiencies Materials Tickets Product Data Sheets Request for MOH Materials Invoices Lab Invoices Testing / Lab Certification Manufacturers Literature Mix Designs Certified Test Reports Quality Control Plans Joint Density Test Results Seed Mix Certifications Bulletin Board Compliance Asphalt Pavement Records Concrete Paving and QC Plan Ride Quality Records Pile Driving Correction Plans Pile Jetting Plans Pile Bearing Eval Documents Soil Nail Wall Construction Plan Temporary Shoring Details Flowable Fill Construction Plan Drilled Shaft Install Plan Freeze Protection Measures Plan for Falsework/Forms Bridge Paint Containment Plans Special Concrete Finish Plans Welding Procedures Technical Support Representatives Work Plans Cert of Conformance Shop/Working Drawings Nonconformance Reports Erection Drawings Demolition Plans SW3P training List Herbicide Records SW3P Documentation BMPs Construction Stage Gate Checklist Flaggers Electricians Irrigators Profilers Labor Interviews OJT29. Labor Compliance 24. Environmental Compliance 27. Construction Equipment Operating on Structures or Materials Stored on Structures Plans and Approvals Payroll hard copies if not submitted through EPRS or LCP Tracker 15. Project Schedule 16. Materials 17. Construction 20. Monthly Estimates 28. Employee Certifications 36. Final hard copy Contractor Evaluation Form 2707 and complete backup documentation saved in a folder separate from the project files 21. Change Orders, Force Account, etc. - All Correspondence and Approved or Unapproved COs 22. Dispute Correspondence, Requests for additional compensation, etc., Approvals, Denials 23. Traffic Control Plans, Revisions, Contractor Proposed Changes, etc. 25. Buy America/Buy Texas Documentation 26. Overweight Construction Traffic Submittals and Approvals 30. Incident and Injury Reporting, 31. Other Correspondence 32. Disposal of Wells Plugging Report 33. As Built Plans 34. Statement of Cost (SOC's) 35. Form 2235 - Final Inspection of Federal Aid project 14. DBE/SBE final payouts 18. Equipment Verifications 19. DWRs - Make sure all DWRs in SiteManager have been authorized. Other Environmental Commitment Documentation as required 2. Preconstruction Contract Correspondence 3. Contract 4. Bid Tabulation 5. Utility or ROW Conflicts 6. Railroad Right of Entry (ROE) 7. Preconstruction Meeting Notes, Sign-In Sheets, etc. 8. Partnering Meeting, Invoice, etc. 9. Preconstruction Safety Meeting Notes Check Percentage of Work Performed by Prime and Subs Check Major Items for Over/Underrun Greater than 25% 10. DBE Subcontractors 11. Subcontractor Approval 12. Prompt Payment Certification 13. DBE/SBE monthly payment reporting 1. Project Event List - A chronological list of all of the major events on the project Figure 21. Texas DOT project closeout checklist.

80 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment • Assigning Quality Individuals to Process Improvement: When the Texas DOT revised their project closeout process, the department assigned its best people to the process revision. This was an organization sacrifice because it pulled these individuals away from closeout operations for significant portions of time over the three- to four-year renovation process. However, this helped ensure that the new process was more efficient overall and was able to be implemented quickly because of the skill of these individuals. • Employee Training: Texas DOT interviewees reported that the department spends a signifi- cant portion of time and financial resources in training employees across the organization. This pays dividends in having trained individuals across the organization, but it also has a positive impact on employee morale. Figure 22. Texas DOT final voucher worksheet (2020).