CONTRACT

CCCCCCCCCCCCCCCCCCCCCC
Prepared for:

CLOSEOUT Dr. Mazlina Zaira Mohammad

& Prepared by:

FINAL PAYMENT 1) Avon Janius
(2018425206)
2) Jackson Pilai Anak Asin

ECM578 (2018437816)
3) Mathius Anak Sidai
(2018639306)
4) Yasmine Amalina Yaakob
(2018425556)
GROUP 10 - 7C2 5) Muhammad Hafiz Omar Ali
(2018693852)
 CONTRACT CLOSEOUT
Definition
The completion of the contract and related inspection,
correction and acceptance of the work.

Initiation Definition Execution Closeout

Conceptual Preliminary Final e !

Construction her
Design Design Design r e
e a
W
Approve Approve
Approve Approve Approve start
alternative start of
mission performance of operation
selection and construction
need baseline or project
cost range or execution completion
 ELEMENT IN CLOSEOUT PROCESS
contract changes,
Submittal of all required
claims, and final
documentation
quantities delivered

Contractor Performance
j or t liquidated damages
a
M en
l em
E in t
u
s eo ss
o
Cl oce
Pr
cost audit Review of the insurance
claim file

inspections Settlement of all

subcontracts
Contract Closure Process Closure confirmation Settlement of disputes
Audit
statement
Problems Solving problem

Company announcement Approval of th security,

for contract property and licenses
Contract phase closure
Summary of pony
Compliances of licenses
Creation of contract statement
with technical report
closure checklist
Completion of final
Compliances of property Receive of contractor database
Requisition for acceptance
guidelines with inventory claims report
of work

Statement of contractor
Compliances with security finish work
Approval of final invoice
Review of credibility permissions with guideline
and sending to financial

Final Payment
Checking of forms
Sending of project closure Lack of additional credit confirmation
dependence
letter acceptance

Review of contractor form

Need
to Audit
Audit?
Filling out of form
 ADVANCE PAYMENT
A sum of money lent by the client to the contractor in the early stages of

DEFINITION construction as financial aid for the work and repayment to the client
through an interim payment deduction.

OF PAYMENT
INTERIM PAYMENT
A sum payable to the contractor on a regular basis as specified in the
standard form of contract for the value of work, which has been
completed plus material supplied and any other eligible items accounted
by the contract.

FINAL PAYMENT
The payment to be made to the contractor or the client of the works
described in the contract after all the contract price adjustment has been
done.
 GET TO KNOW FINAL PAYMENT!!!
The last payment to be When to Upon completion of the
1 What is final
made by the employer 2 request for defects liability period to
to the contractor at final payment?
payment?? the end of the defect
the contractor.

liability period.

4 3 To whom the The contractor shall

The final balance payable contractor shall request to the contract
What is stated to the contractor or the request the administrator to issue a
in the final employer. final payment? final certificate
certificate?
 GET TO KNOW FINAL ACCOUNT!!!
Final account is an agreed It shows the overall
statemnent concerning the amount due to the
What is stated
1 What is final amount of money to be paid at 2 in the final
contractor for the
the end of a building contract. works carried out
account?
account?? under the contract.

3
Who is
responsible to
determine final Quantity surveyor
cost of the
project?
 The contractor must have fulfilled all his
obligation under the contract.

FINAL
ACCOUNT The final measurement and valuation of the executed
work must have been satisfactory completed
In order for the final account to
be formalized the following
Condition must be satisfied!!

All the claims to which the contractor is entitled

must have been evaluated

All the 'set-off'/ deduction to which the employer is

entilted must have been ascertained
ACTIVITY FINAL ACCOUNT PROCESS
Exchange information and
PM or QS will compare the
Present methodologies.
original cost with the actual plan.

Meeting between contractors

and quantity surveyor.

Respective detail and substantial are

The final certificate will be issued
provable, auditable, and justifiable in
when the final account is agreed
accordance with the contract.
Financial statements prepared
by the QS.

Preparation of final account The contractor submits the final The SO/QS is obliged to respond to the
occurs throughout the contract account in the form of a final account contractor's submission.
period. statement.

STAGE 1 STAGE 2 STAGE 3

STAGE
PREPARATION OF FINAL SUBMISSION OF FINAL CERTIFICATE OF FINAL
ACCOUNT ACCOUNT ACCOUNT
 CONTRACT
COMMENCEMENT WHEN DOES
OF WORK
AWARD SITE

POSSESSION
CONTRACT

CLOSEOUT

?
TAKE

CERTIFICATE OF
PLACE
( )
PRACTICAL
DEFECT
HANDOVER
COMPLETION CPC
LIABILITY

( )
PERIOD

DLP

CERTIFICATE OF

COMPLETION

COMPLETION
OF MAKING

( )
GOOD DEFECTS

CMGD

FINAL FINAL CONTRACT

ACCOUNT PAYMENT CLOSEOUT

 BEST PRACTICE
1 ESTABLISHING THAT A CONTRACT IS COMPLETED
2 CONTRACT CLOSEOUT CHECKLIST

3 CONTRACTOR PERFORMANCE REPORT

4 PROOF OF INSURANCE COVERAGE

5 FINAL PAYMENT

6 CONTRACTOR'S GENETAL RELEASE

7 WARRANTY AND GURANRTEE REGISTER

 ESTABLISHING THAT A CONTRACT IS COMPLETED
PROCESS
CHECKLIST
Showing all the contract
PREPARATION deliverables, submittals
and indicating on the
checklist
01 03
Reviewed Inspected Accepted
ESTABLISHING NOTIFY CONTRACT
WORK ADMINISTRATION
IS COMPLETED

PM notify the contract

administrator
Project Manager reponsible to by memorandum
determine contract is completed
and ready for closeout. Contract is completed.

02 Required deliverables
have been inspected
and accepted.
 Checklist of completed contract
Checklists should contain several items, including:

Offer

Acceptance

Parties involved

Lawful subject matter

Mutual obligation

Mutual of agreement

Valueble consideration
EXAMPLE OF A COMPLETED CONTRACT CHECKLIST
 CONTRACT CLOSEOUT

CHECKLIST

A list of steps required to close out a

contract.

✓ Review Contract Documentation

Schedules of the procured work
Documentation created and
provided by the contractor
Financial documents, invoices,
payment records
Issuance of certificates
Results of contractual inspections
Change orders
✓ Completed contract audit
✓ Other requirements of the project

EXAMPLE OF A CONTRACT CLOSEOUT CHECKLIST

CONTRACT CLOSEOUT REPORT

Purpose:
to identify the variances from the baseline plans in terms of
project performance, project cost and schedule.
assess the success of the project and also documents
project deliverables
articulates methods for improvement
formulates lessons learned and best practices from
feedback

Why is it important?

✓ As a reference point for future projects that include

similar tasks or goals
✓ Develop ways to streamline tasks to improve
efficiency in future projects
✓ Better allocation of resources for future projects
using real data

Who is responsible for

creating and developing
a project closure report?
EXAMPLE OF CLOSEOUT REPORT Project Manager
CONTRACTOR PERFORMANCE

REPORT (CPR)

✓ Consistently superior contractor performance

reports may lead to more tendering opportunities for
the contractor in future projects
 Contractor performance is evaluated on:
Pre-construction
Construction (Administration, Safety
& Quality)
Completion Time

Pre-construction Construction Completion time

Administration Safety
Insurance and Timely commencement Proper signage/barriers Ahead
Performance Bond Sufficient workforce Proper housekeeping On time
Work Programme and supervisors Personal Protective Delay
Method statement Sufficient equipment, Equipment (PPE) usage
Quality plan and machineries and plant Zero accident/injury
organisation chart Timely progress and
CIDB Levy & DOSH Quality Reports
Registration Submission
Timely Response to
S.O.'s instructions

Quality
Compliance to specifications
Monthly meetings &
inspections
Response to complaints or
notices
 Proof of Insurance Coverage

NOITARTSINIMDA TCARTNOC 875 MCE

Insurance

an arrangement by
which a company or the
EXAMPLE OF INSURANCE
state undertakes to
provide a guarantee of
compensation for
specified loss, damage, 1. Commercial General Liability
illness, or death in return
for payment of a 2. Professional Liability
specified premium.
3. Commercial Auto Insurance
4. Excess Liability
5. Umbrella Insurance
6. Bond Insurance
 The process:

Contractor Client

proof of insurance proof of insurance

Contract Administrator
 FINAL

PAYMENT

Who is responsible?
Contract Administrator (CA)
STAY

FOCUS

®
Before and after Final Payment

BEFORE
Process of calculating and make any
Final account
adjustment to the contract sum to make sure
amount of Final Payment can be determined.

Process of contract administrator check the

Final Payment
final amount of the cost before proceed to
payment.

AFTER Certification by contract administrator that a

Final Certificate construction contract has fully completed.
 0202 SENILEDIUG DNARB FM
Before proceed to payment

Contract Administration
should:-

Make sure all administrative steps are done

Make use of contract closeout checklist

Required inspection performed

Memorandum from Project Manager

 CONTRACTOR'S GENERAL RELEASE
prepared by grantee's
Must be a
Legal counsel Must contain
Standard statement
Certification

Signed by Corporate official

authorized
as a proof the contractors
Contractor C.A has paid its subcontractors
& Supplier
Closeout
Letter
Final contract amount agreed
by both parties
 Assures the
General release
grantee that there
need to be done
will be no future
before final
claims from the
payment

General contractors

Release
FLOW Necessary for
grantee &
Any changes must
contractor to have
be reviewed by the
resolved all open
Legal counsel
issues of financial
General Release Form Certificate Release
Problem of Contractor who Quit Work

Contractor lacks
sufficient financial Contractor awarded
incentive to complete the another contract
contract
POSSIBLE

Reason

Contractor failing to Contractor have a

perform in a timely problem with the client
manner (Miscommunication)
 Warranty & Guarantee Register
I'm a Contract
Administrator
1 Each individual item of equipment & system

2 Pertinent section in Contract specification

3 Name of company that provide the warranty

4 Expiration date of the warranty Status F
orm

5 Address of the providing company

 Differences
Warranty Guarantee
Written assurance that specified the A promise made by the manufacturer,
product is true and genuine, but if to the buyer, in case the product below
Meaning quality, it will be repaired, replaced or
they are not it will be repaired or
replaced the money deposited will be refunded.

Generally written Validity Can be oral or written.

Product only. Application Product, service and persons.

Need to pay Cost Free of cost

Money back is not possible Money Money back possible

Refund
 LET'S RECAP
Definition Definition
of of Final account
Contract Closeout Final Payment Procedure

Purpose of
Purpose of contractor Process involved
contract closeout performance in Proof of
checklist & report report Insurance
 LET'S RECAP

Role of Contract General release Possible reasons

Administrator in flow contractor
Final Payment quit work

Difference
between
warranty and
guarantee
Thha
annk
k
T
yo
youu!
!