Contract Closure

The final process in project procurement management is contract closure. This involves verification that the work and deliverables of the project are acceptable. Contract closure is used for all contracts that apply to the project. In projects that have several phases, contracts may apply only to one phase and not to the whole project.

Early termination of a contract is a unique type of contract closure. Early termination may result from mutual agreement of the contract parties that the contract should be terminated. It may also come about because the buyer or seller has defaulted on provisions in the contract. Even if early termination occurs, the seller may be paid for accepted and completed work that was done under the provisions of the contract up to the time of the termination.

The inputs into contract closure are the procurement management plan, the contract management plan, contract documentation, and contract closure procedure. All of these have been discussed.

The tools and techniques of contract closure include procurement audits and a records management system. Procurement audits are reviews of the procurement process, from planning the purchases and acquisitions through contract administration. The purpose of a procurement audit is to examine the procurements done during the project so that any discrepancies between the planning and the execution of the procurement process can be noted and documented for review.

The outputs from contract closure are closed contracts and updated organizational process assets. The buyer provides the seller with a formal written notice that the terms of the contract have been completed. In projects that have this type of formal procurement management, there will often be formal contract closure tasks that are defined in the original contract.

The organizational process assets updates will include a contract file, which is a set of indexed project contract documentation. Also included in updates of organizational process assets is formal written notice to the seller that the buyer has accepted the deliverables.

Finally, lessons learned are kept for future analysis and to help any future project managers look at past projects within the organization.

Q.	________ involves verification that the work and deliverables of the project are acceptable.
		A.	Contract closure
		B.	Administrative closure
		C.	Project schedule closure
		D.	Management plan closure

The answer is A. The buyer notifies the seller that the deliverables and work done under the contract have been accepted.

Q.	Contract closure usually involves ________ notice that the contract has been completed.
		A.	Legal
		B.	Management
		C.	Formal written
		D.	Oral

The answer is C. The acceptance of the work done should be in written form. It is possible that the form of the acceptance will be outlined in the contract.

Q.	Early termination of a contract is a unique type of ________.
		A.	Legal requirement
		B.	Contract closure
		C.	Contract fulfillment
		D.	Contract management

The answer is B. The buyer may have to compensate the seller for work done up to that time by the seller.

Q.	A ________ is done to review all procurement processes done during the project.
		A.	Project plan review
		B.	Project management review
		C.	Project performance review
		D.	Procurement review

The answer is D. This is a structured review used to examine all of the procurement tasks done during the project.