Performing Contract Closeout

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Contract closeout is analogous to administrative closure. Its purpose is to confirm the obligations of the contract were met as expected. The project manager, the customer, key stakeholders, and, in some instances, the seller may complete product verification together to confirm that the contract has been completed.

Contract closeout can also be linked to administrative closure, because it is the process of confirming the work was completed. In instances when the contract was terminated, contract closeout is reviewed and is considered closed because of the termination. The project records should be updated to reflect the contract closeout and the acceptance of the work or product.

Reviewing Contract Documentation

To successfully close out a contract, the details of the contract may need to be reviewed. This review ensures that the product verification is complete and in accordance with the language and agreement in the contract. The review actually considers more than just the contract; the project manager should review and consider the following:

• Schedules of the procured work

• Contract change requests—approved and declined

• Documentation the seller has created and provided, if any

• Financial documents, invoices, payment records

• Results of contractual inspections

Auditing the Procurement Process

The successes and failures within the procurement process of the project are reviewed from procurement planning stage through contract administration. The intent of the audit is to learn from what worked and what did not work during the procurement processes. This knowledge can then be applied to other areas within the current project and to other projects within the performing organization.

Completing Contract Closeout

A contract file is a complete indexed set of records of the procurement process and is incorporated into the administrative closure process. These records include financial information as well as information on the performance and acceptance of the procured work.

Assuming the procured work is acceptable and meets the requirements of the contract, the contract can be closed. The formal closure of a project comes in a written notice from the contract officer to the seller. The notice informs the seller that its work is acceptable and that the contract is considered closed. The formal closure process may vary according to the size of the project. The requirements for contract closeout should be documented within the contract.

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