5.7. Contract Closing

The office administrator plays a crucial role in the contract closing process. This involves ensuring that all contract versions are tracked, properly signed, and filed with the correct agencies. You can also store the final signed copies in the office for future reference.

Contract Closure

Just as a project comes to a close, so does a contract. Contract closure involves completing and settling the terms of the contracts for the project. This process ensures that the work described in the contracts is completed accurately and satisfactorily. Not all projects are performed under contract, so this process applies only to those phases, deliverables, or portions of the project that were performed under contract.

Updating Project Records

Contract closure updates the project records, detailing the final results of the work. Contracts may have specific terms or conditions for completion. Be aware of these terms to avoid delays in project completion. If you are administering the contract, check with your procurement department for any special conditions.

Formal Notice

One purpose of the contract closure process is to provide formal notice to the seller, usually in written form, that the deliverables are acceptable or have been rejected. If the product or service does not meet expectations, the vendor must correct the problems before you issue a formal acceptance notice. Any minor items that need to be repaired or completed are placed on a punch list.

Quality Audits

Quality audits should be performed during the project, allowing the vendor to make corrections earlier rather than at the end. Discussing problems as they occur is more efficient than waiting until the project closes.

Punch List

The project team works on the punch list, a list of all the items found by the client team that still remain to be completed, creating a small schedule to complete the remaining work. If the punch list is too large, the project team continues working until it is manageable. The project manager then begins closing down the project, maintaining only enough staff to support the punch list work. See below for some punch list examples.

Formal Acceptance

If the product or service meets expectations, formal written notice to the seller is required, indicating that the contract is complete. This is the formal acceptance and closure of the contract. Document the formal acceptance of the agreement, as specified in the contract itself.

Procurement Department

If the procurement department handles contract administration, inform them when the contract is complete. They will follow formal procedures to notify the seller. Note the contract completion in your project records.

Procurement Contracts

Review the performance of suppliers and vendors to determine if they should remain on the list of qualified suppliers. Review the choice of contract to see if the decision to share risk was justified and if the choice of incentives worked.

“11.3. Contract Closing” from Essentials of Project Management by Adam Farag is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.