construction project closure.pptx

7/27/2019 Construction Project Closure.pptx

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Internal Controls at Construction Site

At Godrej & Boyce, 31st August, Mumbai

Coverage Overview and Relevance of Internal Controls at the Construction Site and Role of a

Project Manager

Material & Labour Procurement Related Controls

Stores Related Controls

Control Points for Various Equipments

HR Related Controls - Labour Colony / Mess / Attendance / Vehicle Management

Statutory Compliances

Basics of MIS Preparation for various Departments - Engineering / Stores / Accounts /

HR / Safety

Role of Site Accounts and Co-ordination with Head Office
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Project Closure


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PROJECT CLOSE OUT TASK

S

Resource Management

Issue Management

Risk Management

Quality Management

Communication Management

Customer Expectation Management

Asset Management

Lessons Learned

Postproject Tasks

Project Close Out Recommendations


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Project Close Out Report is created

to

accomplish the following goals:

Review and validate the milestones and

success of the project.

Confirm outstanding issues, risks, and

recommendations.

Outline tasks and activities required to

close the project.

Identify project highlights and best

practices for future projects.


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Project Closeout Procedur

es


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Project Closeout Procedures


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Issue

In a building project, delays take place and

the contractor applies for extension of time

citing various reasons as related to the

owner before expiry of contractual

completion time. No action is taken by

owner?

Meanwhile owner levies LD on thecontractor

Is the action correct ?


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Issue

During heavy monsoon, the site of works got

completely submerged in water, including

P&M, materials and infrastructure.

Contractor raises time and cost claims

How should client respond ?


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Issue

In a civil project, the lead of stacking

excavated earth was mentioned as 100 mtr.

Due to site conditions it could not be

stacked within above distance.

As approved by owners, the same was

stacked at a distance of 500m.

Should you approve the extra claim ?


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Issue

A project was scheduled to commence on 1stJan as

per LOI

Client delayed release of Mobilisation

Even after release of Mob, the contractor nowclaimed that his equipment are deployed at some

other site

This further delays the start of the project and

later the end

Would you levy any Ld at the end of such project

with a delay?


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Project Closure

Construction Closure

Contract Closure

Financial Closure Project Managers Closure

Lessons Learnt


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Construction closure

Closure of Deficiencies

Certificate of Substantial Completion

Certificate of Occupancy Demob of Resources


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Contract Closure

Preparation of As-built drawings

Submission of O&M manual

Warranties Contractor/Vendors/suppliers/Sub-

contractors

Test Reports


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Financial closure

Final Payment

Release of BG

Release of Retention


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Project Managers closure

Preparation of As-built estimate

Analysis of cost and time overrun

Obtaining feedback from external agencies Obtaining feedback from internal people


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Lessons

Project Objectives?

Satisfaction level ?

Better Ways Level of Quality ?


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A) Timeliness Bid documents

first site meeting

subsequent site meeting

Deficiencies need to be addressed

Repairing deficiencies

deductions in regular Progress Draw

Proceeding in this fashion will ensure that trades

do not leave the construction site


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B) Communication quality standards

specifications

time of the bidding process

specific requirements

level of commissioning activities


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C) Teamwork Something as complex and expensive as a

construction project is best built with a sense of

teamwork

take responsibility for their part of the Work

take an interest in facilitating every other team

members efforts

quality and scheduling of their Work


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IMPLEMENTING A PROJECT

CLOSEOUT PROCESS FORPROJECTS


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www.consultconstruction.com

IMPLEMENTING A PROJECT CLOSEOUT PROCESS

A) Pre-Construction Phase Contract Requirements for Closeout

Bid documents clearly specify

Substantial Performance

all of the documentation

owner occupancy

other intended use


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B) Construction Phase

Job Start Up Meeting

Preconstruction Meeting

Milestones for submittals

Completeness

review compliance


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Contractors Logs

spare parts

as built drawings

commissioning reports

CBO certificate

Fire Alarm certificate

Balancing Reports

testing certificates

maintenance manuals


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QUALITY

Quality Assurance (QA) has implications throughout the

life of a project from its beginning to closeout. Consultant is in charge of Quality Assurance

Contractor of Quality Control

Drawings and specifications

Job reviewing and progresses

Specified quality standards

Communicated to Team members

Documents for quality expected

Critical importance

industry standard

Documented for bidders


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QUALITY

Consultants and Contractors Roles

Site meeting agenda

Communicate quality expectations to all members

Manage owners expectations

Consistency

Quality is higher than standard

Deficiencies

Implement the QA / QC program

Responsibility for the quality of their work The sooner the quality expectations for a project can be

communicated, understood and agreed by all parties, the

better.


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QUALITY

Owners Role

Authorized representative

Decisions made quickly

Communicate their needs and expectations clearly

earlyTime and effort to evaluate

Deficiency inspections


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FINANCIAL

Progress Draws

Deficiency Retainage


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FINANCIAL

Progress Draws

Manuals submit

Warranties submit

incentive to deliver

Work outstanding

deficiencies to correctsubcontractor complies


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FINANCIAL

Deficiency Retainageavoid delays

value of works early

avoid placing undue hardshipPayment Certifiers on percentage of work

complete

cost of repairing deficiencies

price deficiencies


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OCCUPANCY

An important issue is providing the

subcontractor with sufficient time to

complete deficiencies between the

preparation of the deficiency list and theowner moving in. Once the move in takes

place, it can make deficiency completion

very difficult. Good planning needs to takeplace when an owner needs occupancy

before the deficiency list is complete.


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OCCUPANCY

Phased or Partial Occupancy

Sequencing

length of time required

specific closeout

owner has beneficial use

considered for pricing

extra time and money

The owner will be responsible for operating,

maintaining, and insuring the occupied areas and

related equipment and / or systems.


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OCCUPANCY

Occupancy prior to Deemed Completion

substantial performance of the project and

Deemed Completion

Remains incomplete work or deficiencies tocomplete

careful planning and coordination by the

contractor clear communication by the owner


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INSURANCE AND BONDING

Bonding

standard one year comprehensive warranty

Surety companies

comprehensive warranty coverage the surety to address the failure of the contractor

to complete the work

contractual responsibilities are taken very

seriously

protecting the owners rights under a construction

contract


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INSURANCE AND BONDING

Insurance

owner to carry the property and liability

insurance policies

contractors policyowners policy

owner to sign an acknowledgement that

they agree with the change in coverage

Certificate of the policy


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UTILITIES

Utility charges transfer to the owner on the

date of substantial performance and, if

applicable, any accepted date of phased or

partial occupancy. This process should bedocumented in the specifications. If not, an

agreement as to sharing of costs should be

reached as early as possible, wherecontinuing contractor operations are

carried out beyond these dates.


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COMMISSIONING

Commissioning

term often misused to refer to those activities

separate and distinct service,

commence at the beginning of a project

agent to manage

Verify the design performance

specified to be critical

typical start up demonstration

Begins with the definition of the design intent

and ends with the delivery of a building


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COMMISSIONING

Commissioning

Confirms the contractors implementation of the

consultants design as defined in the contract

documents Confirms the ability of the consultants design to

satisfy the owners defined requirements

Addresses any shortcomings The commissioning plan, including the scope and

sequence of the commissioning program

The commissioning specifications, including a

manual with examples of verification forms and
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COMMISSIONING

Commissioning

Any specialized documentation related to testing,

such as CSA Standards, which may describe

options for testing methods Standards for submission and acceptance of

o Shop drawings;

o Contractors tests;o Product, systems, operations, and maintenance

manuals;

o Training programs;

-
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COMMISSIONING

Systems Verification

begins after all components within the system are

accepted and deficiencies are corrected

Regular commissioning meetings to ensure that allparties

prerequisites to testing

Review test procedures and acceptable results

Witness tests

recommendation of acceptance

investigation and reporting


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COMMISSIONING

Equipment Start Up

As the project nears completion, completion

dates should be set for the startup of

equipment and the review by the

appropriate consultant. Reports from the

startup process should be submitted as part

of the final submittals.

CO SS O G


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COMMISSIONING

System Demonstration

take place just prior to turnover

allowing enough time

understanding of the operations

carry out the demonstration

Special requirements

owners train others or refresh the personnel

record the training sessions

DEFICIENCIES


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DEFICIENCIES

Deficiency Inspections

As part of establishing substantial

performance, it is necessary to place a

value on project deficiencies. The contractor

and subcontractors will prepare

lists of deficiencies; address as many of the

deficiencies as possible, and then

hold a formal deficiency review. This review

requires the participation of the

TURNOVER DOCUMENTS


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TURNOVER DOCUMENTS

Documents

Shop Drawings

Operation & Maintenance Manuals

Spare Materials, Parts and Tools

As Built Drawings

Record drawings Measured drawings

Source List Subtrades, Suppliers


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Documents

The owner will be relying on the as built

drawings and manuals for as long as

the structure is in use. A monetary value

may be assessed to the value of

these documents up front so they are part of

the Schedule of Values in the

monthly Progress Draw system (in the bid

specification). Make them a line

WARRANTY PERIOD


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WARRANTY PERIOD

Warranty Administration Process

Warranties

Warranty Period


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Warranty Administration Process

Meet to discuss Warranty Administration

Process the consultants role

generally continues throughout the

Warranty period owner consultant

contractor subcontractor, often the owner

goes directly to the subcontractor,

which is okay in an emergency. However, the

warranty chain is ideal - it lets all

O f U fi i h d B il

di


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Occupancy of Unfinished Building

Occupancy Permit

Conditions for Residential Occupancy

Notification

P j t Cl t C t l F


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Project Closeout Control Form

ARCHITECTURAL

MECHANICAL

ELECTRICAL

S H O P D R A W I N G S A N D S A M P L E S


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Closure of Construction Business

CLAIMS

&

TECHNIQUES TO COMBAT

PROJECT FROM CLAIMS.


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CLAIMS

A claim is a request or a demand for

extension of time and/ or payment of cost

compensation for the loss of time and/ or

extra costs arising from changed situationsincluding errors, omissions, inactions, and

ambiguities.


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Claims

Contractorsclaim against

the owners.

Owners claimagainst the

contractors.


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Reasons for Claims

Alteration of the work, what was originally setfor in contract documents.

Change in the contract plan or method of work.

Change in contract specifications.

Inadequacy of design

Change in site conditions

Technological improvement after award of the

contract. Modification of equipment to take care of any

non availability of materials or equipment.


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Impact on Construction Management

Price:

1. Due to changes on the part of ownersmanagement the price is bound to increase,

a owner has to keep in mind.2. A contractor can quote any price whichcan impact on margin of owner for theclaims made.


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Cost:

1. Cost of Additional direct and indirect material.

2. Cost escalation supplies on original supplies

beyond what is to be absorbed under basecontract.

3. Increased cost on construction equipmentincluding depreciation, distributable expenses

and on site expenses.4. Financial charges including working capital.


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Time

Time can affect claim in two ways for the

base

1. Finance

2. Cost


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Precautions

To overcome the Reasons of Claims & Impact

of Construction Management, Owner shall take

some precautions as to minimize his claim.

To keep design and drawings up to date.

Specifications are required to be clearly

furnished.

Stay in touch always materials or equipmentdepartment, which is forming part of owners

free supply.


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Precautions

Aware of the implied duties of contract.

Aware of the site conditions at Initial level.

Be clear about sub contractor work if any,

as delay in work affect negavetively to

project.

Rescheduling of work for financial reason

can cause high claims.


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Precautions

Site shall be clear from every obligations before

it is hand over to contractor.

Safety measures regarding Natural calamities

like earthquake, fire, floods, etc. shall be taken,provision for it in contract shall be made as to

initiate a project after its impact.

Quantity of materials shall be supplied on timeand taken in to account. If any variations,

owner have provision regarding this.


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Advantages to Precautions

If Owners management is taken care of abovePrecautions than will have following benefits :

Against Defective Work: Management will

come to know about the defects if it is on partof contractor than claim can be made to owner.

Against Delays: After taking precaution on thepart of delays, it can be arise on part of

contractor in way of inadequate mobilisation,in competent workmen, inefficient supervision,etc


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Advantages to precautions

Against Time: As due to contract will beschedule and owner will have a huge advantageto complete the project on time.

Against Cost: A cost control can be establisheddue to such precautions and owner margin canbe saved.

Against Transparency: In the business world a

sign of trust is important, due to theprecautions a businness relationship can bemaintained.


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Techniques to Overcome Claims

Project overrun is a serious economic problems inthe developing countries like India.

In the fiscal year 2010-2011, the Ministry ofStatistics & Program Implementation have revealed

some disturbing figures as the poor implementationof the central sector infrastructure projects likeRoads, Railways, And Power would result in costover run of 1.24 lakh crore.

Out of 600 projects cost of over 150 crore projectsare approved without dates i.e 73, 203 are cost overruns and 306 are time over runs.


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A few techniques to overcome

Involve all agencies and integrate their plan.

Integrated Procurement Plan

Set Daily Targets

Daily Monitoring By Headquarters Intergrated Resource Management

Engage A Competent Consulting Organisation

and use it fully. Support vendors and contractors with fairness.

Create a fearless working atmosphere.


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Claim

Unresolved Issues among project

participants

Time Extension

Additional cost reimbursement

Claims are unavoidable due to high

expectations from Project Owners


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Source of Claims

Dual meanings in contract documents

Delay in release of fronts

Owners desire for early completion

Delay in supply of FIM

Delay in release of drawings

Infrequent release of payments Changes in scope of work

Improper mobilisation from the contractor

Weather


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Claim Management

Claim Identification On the basis of drawings /

BOQ / Contract Terms

Claim Notification Intimation to the other party

Claim Substantiation Calculations / SupportingDocuments / Fairness

Owners Decision Final Stand within a proper

Time Frame Further action by Contractor Legal Action

The top five causes of disputes in Asian


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p p

construction projects during 2011 were:

1. Failure to make interim awards on

extensions of time and to give associated

compensation 2. Unrealistic risk transfer

from employers to contractors 3. Conflictingparty interests 4. An unrealistic contract

completion date being defined at tender

stage 5. Incomplete design information oremployer requirements.


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Avoiding Disputes

Recession - Idle Overheads Under Quote

Failure

Immediate Closure of Claims

Ego Barriers Owners assume that all risks are covered in quote

Relevance of CPM Network to assess delay

Train lower staff to avoid escalation of issues Understanding of contract conditions and local

laws

Submission of Claims

Issue Review Anal ssis Pers ective
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Communication

Specific

Response in all cases Proper Documentation

References of earlier communication / Followup

Communication Rejection of extra claims with proper basis

Correctness of Facts

Simple and Understandable Language Contractor specific email id


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Session 3

2.1 Time claims by contractor analysis & verification

2.2 Cost claims by controller analysis & verification2.3 Project Completion:

a) Final Bill preparation and Certification

b) Final Material Reconciliation FIM & Raw

c) Fulfillment of client work completion procedure

d) Status clearance of Receivable & Liability

e) Statutory Compliance by agencyf) Possible reasons for delayed in submission of Final bill

g) Site Demobilisation

h) Release of Retention Monies

2.4 Engineering MIS formats & its Advantage

R ili ti FIM & P i i l M t i l


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Reconciliation FIM & Principal Material

Standard Consumption norms to be defined for every item in the WO.

For e.g. For 1 CUM of M20 - concrete production Cement 140 Kg, Sand 875 Kgs, Agg 1100 Kgs

Some issues-

Physical verification on the closing day of billing cycle

Material scattered at various locations Consumption for unbilled extra items to be excluded.

Stock records to be updated regularly.

Recovery from sub-contractors In case of excess consumption

Proper justifications for abnormal differences

FIM material return without proper documents


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FIM and Raw Material Reconciliation with bill and balance qty.:

Some of the Common Issues Faced in Steel:-

12 mm TOR Steel has been consumed instead of 10mm TOR steel (as per

drawings) without communication to the client.

Definition of scrap

Returning servicable steel as scrap stock.

Lack of Control on timely return of servicable steel.

Rework

Use of FIM in Own Structures like cement stores / office / labour colony

Client has to plan Inter-contractor transfer But with docs

Pilferage not being tracked

Smart Client Issue steel MM wise

Project Completion cont.

Client Perspective: - FIM is very critical


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Reconciliation Shuttering

Reconciliation on a Quarterly basis.

Basic benchmark for shuttering wooden consumption for single repetition

= 1 cum of concrete 4 sq mtr of shuttering.

For housing projects, PVC shuttering can be very cost effective.

It is advisable to give one structure per sub-contractor so that issue of wooden

material can be tracked and debited in case of extra consumption.

Crucial Role of PM Deciding Shuttering Mix Metal / Wooden / Combined


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Billing Engineer

A. Client & Sub Contractor billing and Certification: Same Billing period for both client & sub contractor

Match the Quantities

Facilitate preparation of MIS

Identification of Extra Items

DPR should be generated.

RA bill preparation on Time as any delay

Affects Fund management

MIS

Client Perspective: - Client has to ensure that no excess billing or qty for

incomplete activity or unauthorised extra items are claimed by contractor.


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Project Closing Phase

Maintenance close

Administrative close

Contract Close out

Lessons Learnt Report


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A properly closed project is an invaluable asset to theorganisation. Project manual should be prepared:-

Project History

Important Events

Schedule of Work

Salient features of contract documents

Addresses of suppliers

Problems encountered during execution Lessons Learnt

Post completion maintenance requirements


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Project Completion

Checklist for Project Completion

Pending / Hold / WO Amendment

Idling

Final bill certification

FIM Reco Work completion NOC

Receivable & Liability status

Statutory compliances

Demobilization

Delayed in project completion

Work completion certificate


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Reasons for Delay in preparation of Final RA Bill

S. N. Points Corrective Action

1 Non updation of FIM data with stores. Physical verification of FIM with stores

records

2 Reconciliation of FIM Required with each RA Bill

3 Work order Amendment Little foresightedness

Strong Followup

4 Change in Project Manager / Billing Engg. Documentation-JMR/BBS/Stores

Good Back up at HOHanding over Checklist

5 Proper compilation of Hard and soft copies of all the

Running Bills

Data Control and Regular Audit

6 Insistence to satisfy requirements of Labour Inspector

If you are under EPC

Clarity in Work Order Terms

7 Quality compliance after defect liability You should argue that it is client responsibility

8 Idling Claims depending on locations like Orissa /

Kerela - Local problems

Record / Emails to client on regular basis

9 Direct Payments by the client Documentary Evidence

P j C l i


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Work completion certificate:

Dontforget to collect the work completion certificate from the client

Demobilization:

Dehire all types of equipment and machinery.

Make proper plan for shifting of own material to other sites / Central Stores.

Proper plan to shift staff.

Dehire idle camp / mess and do not forget to recover the rent deposit or set off deposit against

rent.

Check, get and release Bank Guarantee from client after defect liability period is over

Project Completion cont.

Planning - Lalu


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Release of Retention Money

Checklist compliance

Certification of Final bill

Completion of work upto Defect liability period

No local liability Site and area clearance

Return of all FIM

Premature Release Against Bank Gaurantee Till DefectLiability

R f P j F il


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Reasons for Project Failure

Poor Field Investigation

Inadequate Project Information

Bad Cost Estimate

Lack of Experience

Inadequate Project Feasibility Analysis

Poor Project Appraisal leading to incorrect investment

decisions

Deliberate Manipulation to start the project Incorrect Organisational Structures


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Engineering MIS

Client Perspective: - Client have to set DPR mechanism to check work progress.
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