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81  The objective of this synthesis was to document the current state of practice in construction and financial closeout by state DOTs for highway construction projects. This chapter presents the key findings from the literature review, a state DOT survey, and case examples. Then, in focusing on the knowledge gaps and barriers noted in the key findings, future research ideas are presented. Observed Findings State DOTs reported the use of a formal project closeout process that begins with the substan- tial completion of the construction work and ends with the final payment to the contractor and final reimbursement and closeout of funding source accounts. The key findings and current practices in closing out highway construction projects observed from the literature, the survey questionnaire, and the case examples are listed below in no particular order. ⢠Project Closeout Duration 1. Closeout Planning: Survey responses and the case examples illustrated that state DOTs begin the planning of a project with the end in mind to invoke project closeout processes early on in a project, such as auditing of materials and collection of project documents. The sooner that a project team considers project closeout during the design and construction phases, the easier it is to collect and organize required documents and information as the work progresses. 2. Management Emphasis: When upper DOT management emphasizes the importance of project closeout (whether due to internal initiatives, external pressure, or state audits), the project closeout duration appears to shorten as internal DOT stakeholders prioritize timely project closeout as observed from the case examples. 3. Average Project Closeout Duration: The duration to closeout a project varies from state DOT to state DOT as well as project to project. As found in the literature, the survey question- naire, and the case examples, state DOTs set project closeout duration goals and then use these goals to measure the performance of the closeout process. ⢠Project Closeout Documentation 1. Documentation and Audits: Missing or lost, incomplete, and inaccurate project documen- tation and audits delay the closeout process, as the case examples noted that DOT staff need to spend more time at the end of a project tracking down the documents and making sure they include complete and accurate information. 2. e-Construction: e-Construction initiatives have impacted the project closeout process, as they can make the documentation portion more efficient through real-time sharing of information and the use of electronic reviews and digital signatures for approvals. One- half of the state DOTs that participated in the survey reported that they use e-Construction services during the project closeout process. C H A P T E R  5 Conclusions and Future Research
82 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment 3. As-Built Documents: As-builts provide a record of the installed facility for future preser- vation and improvement. As seen in the literature review and survey questionnaire, the process of completing as-builts is evolving at DOTs as states slowly move from paper-based systems to electronic-based systems. 4. Incentives: Contract incentives encourage contractors to submit project closeout documen- tation in a timely manner or portions of a final payment are withheld until complete and accurate documents are received in full. State DOTs from the case examples noted that this incentive approach has helped improve the urgency from the contractor to close out the project in as timely a manner as possible. ⢠Implications of Not Closing Out a Project 1. Resources: The implications of delayed project closeout result in the inability to use resources for other projects and responsibilities, as survey responses and the case examples observed that resources are tied up in project closeout longer than anticipated and are unable to be moved on to subsequent responsibilities. 2. Additional Project Costs: Project closeout delays lead to additional funds needed for a project. As observed from the case examples, additional costs are due to the resources needed for the additional time and interest payments for delayed payments as contractors wait longer for the release of final payment and retainage. 3. Contractor Impacts: When closing a project takes an extensive amount of time, this delays the final payment and release of retainage to the contractor as well as impacts the con- tractorâs bonding capacity and future work since part of their bonding is tied up in a project that is taking much longer than expected to close. These impacts can negatively impact the DOT-Contractor relationship on future projects. This is particularly detrimental to project closeout, as cooperation between the DOT and Contractor was the most frequently cited factor for project closeout success from the survey questionnaire responses. 4. Lost Documentation: Not tracking documentation properly during construction and delays in project closeout increases the possibility of losing critical documents. As seen with the data from the survey questionnaire and case examples, lack of proper documentation results in unsupported or ineligible funding source costs. 5. De-obligation of Funds: Highway projects receiving federal aid are at risk of losing federal funding if a project does not close out in a timely manner and is left inactive for one year after the project acceptance end date. Case examples noted that the de-obligation of funds due to untimely closeout leads to additional work to find and use other sources to cover costs that were eligible for federal funding. ⢠Project Closeout Processes and Tools 1. Continual Closeout Processing: As observed from the case examples, having inspectors perform audits as the work progresses helps to make sure project closeout data and docu- mentation are completed throughout the construction phase so as to reduce the documen- tation efforts needed at the end of a project. 2. Electronic Resources: Using an electronic-based project closeout system has made project closeout more efficient as documents are shared, reviewed, approved, and signed in less time when compared with using paper-based processes. Observations from the case examples showed that digital signatures speed up the approval time in that no longer does a document need to physically travel from person to person for paper-based signatures. 3. Importance of Communication: Communication and cooperation among the internal divi- sions of the DOT and their external stakeholders are key to timely closeout so that the project team understands the project closeout process and objectives. Comments from the survey questionnaire and DOT staff from the case examples emphasized that when sharing transparent and detailed closeout information in a timely manner, project closeout tends to be more efficient and timelier.
Conclusions and Future Research 83  4. Measuring Project Closeout: Project closeout performance measures used by state DOTs collected from literature, the survey responses, and case examples include the total number of days between project closeout milestones, the number of projects needing to be audited, the number of projects that are on the FHWA inactive list, and the number of projects that have errors in the final packet. 5. Performance Measures and Accountability: The inclusion of project closeout performance measure results with state DOT employee performance reviews provides accountability and focus on the part of employees to improve their closeout efficiency and timeliness. ⢠Project Closeout Delay Factors 1. Stakeholders: Stakeholder-related issues that delay project closeout from the survey ques- tionnaire include changes in personnel, not billing in a timely manner, and outstanding claims. Survey respondents and case studies specifically mentioned that local utilities and railroads impact the closeout process, as these entities may not follow the DOT closeout schedule and lack an urgency to close out a project. 2. Local Municipality Projects: Locally funded projects may experience longer project closeout durations. The case examples noted that local municipalities may lack a formal closeout process to follow and use paper-based documentation. 3. Multiple Funding Sources: The use of multiple funding sources for a highway construction project adds more work and complexity to the project closeout process. Staff from the case examples noted that the more funding sources, the more documents, reviews, and approvals needed, which all take time to complete. 4. Documentation and Claims: Delay factors identified include difficulty in receiving required closeout documentation in a timely manner and outstanding claims between DOT and contractors. As mentioned by DOT staff in the case examples, any document issues and unresolved claims means no reconciliation of accounts, and the project cannot be closed. ⢠Project Closeout Practices 1. The Closeout Process: The literature, survey data, and case examples showed that state DOTs have formal project closeout processes in place, which are detailed in construc- tion manuals, specifications, final closeout documentation, and finalization checklists that describe the sequential steps of project closeout, the required documents, and the duration expected for each step in the closeout process. 2. FHWA Influence: The literature, survey comments, and case examples noted the FHWA closeout process. The FHWA has a formal project closeout process for projects using federal aid that state DOTs use and follow along with an accountability system for proj- ects that remain open but inactive for too long. State DOTs in the case examples acknowl- edged that the FHWA closeout requirements are often a consideration when final funding apportionment decisions are made. 3. Improving Project Closeout: In several of the case examples, state DOTs mentioned that their internal improvements toward project closeout have resulted in more efficient closing of projects. State DOTs realize the importance of timely project closeout internally without any external influence. 4. Closeout Rating System: The rating system categorizes meeting the project closeout duration goal instead of meeting one goal for all projects. Larger and more complex projects have many more line items, accounts, and documents to review, process, and approve along with more stakeholders involved, meaning the one-size-fits-all project duration goal may be difficult for larger projects to obtain. A rating system based on the number of pay items to reconcile and close for a project normalizes the project duration closeout goal based on the project size and complexity. 5. Influence of Lean Construction: State DOTs are implementing Lean Construction into project management, including the closeout phase, in order to find the gaps in knowledge
84 Practices for Closing Out Highway Projects from Substantial Completion to Final Payment and pinch points in the closeout process so that process improvements can be put into place that make the project closeout process more efficient and timelier. Several state DOTs from the survey responses and the case examples highlighted improvements realized from the use of Lean Construction in the project closeout process. 6. Training: By providing training and documenting the project closeout process, it was observed from the case examples that DOTs help their employees to recognize the impor- tance of project closeout and how to carry out their responsibilities associated with project closeout effectively. Future Research The gaps in knowledge and practice identified in this study serve as a point of departure to explore the potential for future research. This synthesis report and future research studies help guide transportation agencies by providing information and practices for closing out highway construction projects. As such, the following are suggested future research areas related to project closeout: ⢠Implementing the use of technologies for project closeout: Most state DOTs are currently or are progressing toward electronic project closeout using e-Construction processes. However, there is a lack of other construction technologies in use for project closeout. Building infor- mation modeling for infrastructure, RFID, UAVs, and handheld digital inspection devices are currently in use by DOTs and their contractors during the construction phase of a project, but not necessarily used specifically in the closeout process. Furthermore, these technologies collect information relevant for digital as-built drawings, but their use for project closeout and creating digital as-built documentation is currently limited. There is potential to investi- gate the use of technologies for project closeout. ⢠Quantifying the impact of delayed closeout: Few state DOTs have performed a detailed analysis of the impact of delayed project closeout. Such an analysis could help determine the costs and benefits of potential strategies to reduce closeout durations and provide evidence to support the importance of project closeout within state DOTs. ⢠Streamlined project closeout processes: The volume of information required, documentation, and the number of stakeholders and funding sources involved with project closeout make existing closeout processes complex for DOTs. An investigation into streamlining the docu- mentation requirements for project closeout and project management is needed. ⢠Development of project closeout principles in project level inspections: With a few state DOTs acknowledging that they train their inspectors to perform audits as the work progresses, there is the potential to investigate developing inspection training that infuses the princi- ples of project closeout into the inspection processes that occur during construction, such as collecting and tracking documents throughout construction, developing as-built drawings as the work is performed, and certifying materials as they are put in place. ⢠Project closeout procedures for P3 projects: The project closeout procedures for P3 projects vary significantly from other project delivery methods, as the P3 projects include both public and private partners in the funding of a project as well as the concessionaire being responsible for maintenance of the project once construction is complete. This makes the construction and financial closeout and turnover of a P3 project complex. An investigation into current practices of P3 projects closeout could serve as guidance for future P3 projects.
