National Project, O&M Management

Organization (Mashroat)

Mashroat Projects White Book

Volume 4, Chapter 23

Contract Closeout Procedure

Document No. EPM-KD0-PR-000022 Rev 001

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 Contract Closeout Procedure

Document Revisions History:

Revision Date Reason for Issue

000 25/10/2017 For Use

001 15/01/2018 For Use

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 Contract Closeout Procedure

THIS NOTICE MUST ACCOMPANY EVERY COPY OF THIS DOCUMENT

IMPORTANT NOTICE

This document, (“Document”) is the exclusive property of the National Project, Operation and Maintenance
Management Organization (“Mashroat”).

This Document should be read in its entirety including the terms of this Important Notice. The government entities
may disclose this Document or extracts of this Document to their respective consultants and/or contractors, provided
that such disclosure includes this Important Notice.

Any use or reliance on this Document, or extracts thereof, by any party, including government entities and their
respective consultants and/or contractors, is at that third party’s sole risk and responsibility. Mashroat, to the
maximum extent permitted by law, disclaim all liability (including for losses or damages of whatsoever nature claimed
on whatsoever basis including negligence or otherwise) to any third party howsoever arising with respect to or in
connection with the use of this Document including any liability caused by negligent acts or omissions.

This Document and its contents are valid only for the conditions reported in it and as of the date of this Document.

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 Contract Closeout Procedure

Table of Contents

1.0 PURPOSE .......................................................................................................................................... 5

2.0 DEFINITIONS ..................................................................................................................................... 5
3.0 ROLES & RESPONSIBILITIES ......................................................................................................... 6
4.0 PROCESS .......................................................................................................................................... 6
4.1 Final Inspection .................................................................................................................................. 6
4.2 Closing out Contract ........................................................................................................................... 7
4.3 Distribution of Closeout Documentation ............................................................................................. 7
4.4 Final Payment..................................................................................................................................... 7
4.5 Historical Fact Sheet .......................................................................................................................... 7
4.6 Disposition of Records ....................................................................................................................... 7
5.0 ATTACHMENTS ................................................................................................................................ 7
Attachment 1 - EPM-KD0-TP-000044 - Contract Close-out Checklist Template ......................................... 8
Attachment 2 - EPM-KD0-TP-000045 - Contract Demobilization Checklist Template ................................. 9
Attachment 3 - EPM-KD0-TP-000023 - Contract Fact Sheet & Historical Record Template ..................... 10

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 Contract Closeout Procedure

1.0 PURPOSE
This procedure covers the final inspection and actions required to closeout a contract from a commercial
perspective only. Project Construction Completions and Turnover Procedure is prescribed in the
Construction Department’s Procedures EPM-KCC-PR-000003.

This procedure applies to Works performed under all Government construction projects executed
throughout the Kingdom of Saudi Arabia.

2.0 DEFINITIONS
Term Definition

2nd Party Contractor, Consultant, Engineer or Supplier who expresses interest in

prequalifying for a specific package of Works or Services and upon
Award becomes the entity contracted to perform such Works or Services
Agreement Contract or Purchase Order (collectively “Agreement”) between the
Entity and a 2nd Party
Construction Contractor The Main or Principal Contractor responsible for undertaking the
Construction Works on the Project.
Contract Closeout Checklist The internal form used to confirm that all Contract requirements have
been satisfied prior to Closeout.
Demobilization Checklist The internal form used to confirm that all Contract requirements have
been satisfied prior to demobilization of the 2nd Party's material,
equipment, and facilities from the jobsite.
Entity Government Entity, Authority or Ministry responsible for the Project(s)
Final Handover The form or letter used to confirm agreement that the 2nd Party has
completed all requirements of the work described.
Jobsite Place or location where the Works or Services will be performed
sometimes referred to as the site or location of Works or Services.
Performance Evaluation The internal form used to evaluate and record a 2nd Party's performance
and suitability for future work for an Entity.
Project Project to be undertaken by an Entity that consists of single or multiple
Agreements with 2nd Parties to perform Works or Services as part of the
execution plan to deliver such a Project
Release and Certificate of The form that the 2nd Party must complete and submit with its application
Final Payment for final payment. Except as may be otherwise specified on the form, 2nd
Party releases all claims against the Entity
Requisition Requisition for Tendering
Services Provision of technical or consulting services for design, studies,
investigations (geotechnical, surveying testing), specialist advice or the
like that are not the Works but necessary to support them
Site Construction Department within the Project Management Company that is responsible
Department for Construction activities/operations.
Site Contracts Department Department within the Project Management Company that is responsible
for administering Contracts.
Site Document Control Department within the Project Management Company that is responsible
for the control of all project Documents using ECMS.
Site Engineering Department Department within the Project Management Company that is responsible
for Engineering or design activities/operations.

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 Contract Closeout Procedure

Works Construction or supply of goods, facilities or the like of permanent and

temporary nature as contracted by the Entity

3.0 ROLES & RESPONSIBILITIES

The following defines the individual roles and responsibilities associated with the Close-out of a Contract
for Works or Services:

Individual Role
2nd Party’s Authorized The individual from the 2nd Party’s organization who is authorized to
Representative commit the 2nd Party to closeout actions.
Contracts Administrator Individual with the primary responsibility to ensure that all commercial,
contractual, and technical requirements have been met or reconciled
before issuing a final acceptance notice and releasing the 2nd Party
Contracts Management Overall responsibility for the management of contracts closeouts and
Department Manager reconciliation before issuance of final acceptance notice and release of the
2nd Party
Resident Engineer Responsible for the management of the Work at the Site and validating
Technical Requirements have been satisfied in accordance with the
Agreement.

4.0 PROCESS
Contract closeout means that both the Entity and the 2nd Party have discharged all contractual obligations.
This includes all commercial, technical and administrative obligations contained in the contract and requires
formal resolution of all changes, requests for time extension, claims and back charges.

Although the 2nd Party has the primary responsibility for an in-process inspection, the 2nd Party shall be
notified of non-complying items identified by the Entity as they are discovered. The final inspection and
walk down should simply be a confirmation of the closure of all open non-conformance reports issued during
the progress of the work. Final Handover and closeout procedures will have to be modified for those
contracts that have turnover, start-up, or performance test requirements.

4.1 Final Inspection

Final inspection and closeout is the work process used to closeout a Contract. Final inspection and close
out may occur as a single event or may be done in several steps as partial systems or areas are accepted.
The process may involve two or more stages with initial acceptance being issued at completion of the
physical work (including relevant quality documentation, operations and maintenance manual issue etc.).
This first stage would typically result in a partial release of retention money or performance security. Final
acceptance and the release of the balance of the retention money and performance security occurs at the
completion of the maintenance period and on the handover of the operational spares, as signified by the
issue to the Entity of a maintenance certificate signed by the Resident Engineer within 28 days of the end
of the 2nd Party maintenance period.
Contract closeout encompasses the completion of a number of activities or actions, which include the
following steps:
 The Contracts Administrator shall initiate a Contract Closeout Checklist in preparation for the
anticipated request from the 2nd Party for Final Inspection.
 The 2nd Party shall notify the Entity of Work that is complete and ready for Final Acceptance.
 The Entity, and the 2nd Party shall then perform a joint inspection of the Work and verify that no
Defects exist and any notified Defects have been satisfactorily resolved.

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 Contract Closeout Procedure

 Any identified Deficiencies shall be recorded on the revised issuance of the Defect List and the
Closeout of the Contract shall be deferred until such time as the notified outstanding Defects are
resolved.

4.2 Closing out Contract

When all outstanding Defects are resolved, and the Defect Liability Period has concluded, the Contracts
Administrator shall initiate the Closeout of the Contract generally following the process herein:
 When all check items on the Contract Closeout Checklist are complete, a Certificate of the Final
Handover should be completed and provided to the 2nd Party with a Release and Certificate of the
Final Payment. In certain instances, a Partial Release and Certificate of Payment may be used.
 Prior to demobilization, the Contracts Administrator shall prepare the 2nd Party Demobilization
Checklist and, with the concurrence of the Resident Engineer, route the checklist for review and
approval.
 If all contractual requirements have not been met or supplied by the 2nd Party, the 2nd Party shall
be notified of the deficiencies in writing.
 After the items on the Contract Closeout Checklist are accepted, the Entity will issue a Certificate
of the Final Handover to the 2nd Party.

4.3 Distribution of Closeout Documentation

The Contracts Management Department Manager shall obtain the approval of the Administering
Department, originating Department and the Director of the Contracts Management Department for the
issuance of the Final Acceptance Certificate to the 2nd Party to record formally that the 2nd Party’s
obligations under the Agreement have been fulfilled.

A copy of the Letter and Final Acceptance Certificate shall be provided to the originating Department and
Administration Department for their records.

4.4 Final Payment

After receiving a signed Release and Certificate of Final Payment from the 2nd Party, the 2nd Party's final
invoice may be processed, including release of retention in accordance with the provisions of the contract.
A reasonable retention may continue to be withheld if necessary to ensure timely resolution of claims
against a 2nd Party; but retention should not be withheld simply to induce a 2nd Party to settle on a claim
against the Entity. In some instances, if both parties agree, an irrevocable Letter of Credit or Bank
Guarantee can be provided by the 2nd Party in lieu of continuing to withhold retention.

Upon receipt of an executed Release and Certificate of Final Payment and a copy of the Contract Closeout
Checklist, the Entity’s Accounting department will process payment of the final amount due.

4.5 Historical Fact Sheet

After the final payment has been made, the 2nd Party Fact Sheet and Historical Record and 2nd Party
Performance Evaluation shall be completed.

4.6 Disposition of Records

Originals or copies of all closeout documents shall be filed in the Contract closeout file. Record retention
shall conform to the project document control requirements.

5.0 ATTACHMENTS

1. EPM-KD0-TP-000044 - Contract Closeout Checklist Template

2. EPM-KD0-TP-000045 - Contract Demobilization Checklist Template
3. EPM-KD0-TP-000023 - Contract Fact Sheet & Historical Record Template

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Electronic documents once printed, are uncontrolled and may become out-dated. Refer to ECMS for current revision.
This Document is the exclusive property of Mashroat and is subject to the restrictions set out in the Important Notice contained in this Document.
 Contract Closeout Procedure

Attachment 1 - EPM-KD0-TP-000044 - Contract Close-out Checklist Template

CONTRACT CLOSEOUT CHECKLIST

CONTRACT NO.: PROJECT:

SECOND PARTY: JOB NO.:

PAGE 1 of 1
CHECK ITEM YES NO N/A INITIAL DATE
1. Final Inspection Held
2. Deficiencies Corrected
3. As-Built Drawings Received and Satisfactory
4. Operating/Maintenance Manuals Received
5. Spares Delivered
6. Maintenance/Test Equipment/Tools Delivered
7. Final Quantities Agreed Upon
8. Warranty Statements Received
9. Warranty Procedure Established
10. QA/QC Documentation Review Complete
11. QA/QC Inspection Complete
12. All NCRs Resolved
13. All Contract Changes Completed / Closed
14. All Claims Resolved
15. All Backcharges Satisfied
16. Bechtel/Customer-Furnished Equipment & Surplus Materials
Returned
17. All Safety Incidents Resolved
18. Completion Notices Provided
19. Release from Contractor Received
20. Releases from Subtier Contractors Received
21. Financial Audits Completed and Resolved
22. Demobilization Checklist Approved
23. Fact Sheet and Historical Record/Performance Evaluation
Completed
24. Final Invoice Approved
25. Files Dispositioned

ROUTE SIGNATURE DATE

Contracts Administrator
Field Engineer
Quality Manager
Project Controls Manager
Finance Manager
Contract Management Department Manager
Project Manager / Site Manager

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 Contract Closeout Procedure

Attachment 2 - EPM-KD0-TP-000045 - Contract Demobilization Checklist

Template

CONTRACT DEMOBILISATION CHECKLIST

ENTITY:
CONTRACT NO.:
COMPANY
SECOND PARTY: JOB NO.:

CHECK ITEM YES NO N/A INITIAL DATE

1. Material Surplus Removed and Disposed

2. Temporary Facilities Removed

3. Utility Connections disconnected and removed

4. Tools and Equipment Removed

5. Jobsite reinstatement completed

6. Other (add as relevant to Scope)

ROUTE SIGNATURE DATE

Field Engineer

Project Controls Manager

Contracts Management Department Manager

Project Manager / Site Manager

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Electronic documents once printed, are uncontrolled and may become out-dated. Refer to ECMS for current revision.
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 Contract Closeout Procedure

Attachment 3 - EPM-KD0-TP-000023 - Contract Fact Sheet & Historical

Record Template

Contract Fact Sheet and Historical Record

SECOND PARTY JOB NUMBER

STREET ADDRESS CONTRACT NUMBER

CITY, COUNTRY 2ND PARTY REPRESENTATIVE

[ENTER NAME]

DESCRIPTION OF CONTRACT

ESTIMATED COST/PRICE ENTITY’S NAME APPROVAL DATE

ESTIMATED STARTING DATE OF CONTRACT ESTIMATED DURATION CONTRACT

DATE INVITATION TO TENDER ISSUED

PRE-TENDER VISITS AND MEETINGS (INCLUDE LOCATION)

TENDERS RECEIVED AND AMOUNTS (ITEMIZE)

MAIN LOWER TIER SUBCONTRACTORS & TYPE OF WORK VALUE OF WORK

SUPPLIERS

PRE-AWARD MEETING LOCATION DATE OF PRE-AWARD MEETING

EFFECTIVE DATE OF INSURANCE INSURANCE EXPIRATION DATE

FIELD CONSTRUCTION MANAGER AND DATE ENTITY LETTER ISSUED

DATE NOTICE TO PROCEED ISSUED DATE OF CONTRACT AWARD

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 Contract Closeout Procedure

PROGRESS SCHEDULE APPROVAL DATE LAST UPDATE

SUBMITTAL DATE

ACTION START DATE ACTUAL COMPLETION DATE CONTRACTUAL

COMPLETION DATE

WORK ACCEPTED (FINAL INSPECTION DATE) INSPECTED BY

DATE ALL AS BUILTS APPROVED DATE CONTRACT FINAL ACCEPTANCE LETTER

ISSUED

DATE RETENTION RELEASED AMOUNT

AWARD AMOUNT

AMOUNT OF CONTRACT CHANGE ORDERS AND NUMBER OF CONTRACT CHANGE ORDERS AND
AMENDMENTS AMENDMENTS

AMOUNT OF COMMITMENTS WITHOUT CHANGE NUMBER OF COMMITMENTS WITHOUT CHANGE

ORDERS AND AMENDMENTS ORDERS AND AMENDMENTS

AMOUNT OF CLAIMS SUBMITTED (NO IN FINAL AGREED VALUE OF CLAIMS (NO. IN

BRACKETS) BRACKETS)

AMOUNT OF BACKCHARGES NUMBER OF BACKCHARGES

FINAL CONTRACT PRICE

PREPARED BY DATE CONTRACT HISTORICAL REPORT PREPARED

__________________________________________
___
INSERT NAME:
INSERT ROLE

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