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September 22, 2003 11:22 AM CDT

Getting Done and Getting Paid!

Closing out the commercial construction project for the mason contractor


There are arguably no greater words that a masonry contractor can hear than "you're done" ... really done. The job is really finished, the punchlist is really satisfied, and you really have fulfilled your end of the bargain - the one you struck lo those many months ago. Unfortunately, in the construction industry, determining when you're really done can be a frustrating exercise - as the definition of finished can vary greatly, depending on who's doing the defining: the owner, architect, general contractor, or masonry contractor. What do I mean by "frustrating"? Well, see if this sounds familiar.

A Story
Take one of your recent jobs, for example. A week after you satisfy the first (and you thought only) punchlist for the project you recently completed - you mail out your final billing to the general contractor. On that very same day, an unannounced (and unanticipated) second punchlist arrives in the mail. In it are new items; items "that must be remedied before final payment will be released."

The items on the new list describe missing weeps, bad mortar joints, and reservations over the sealing job. In addition, there are other larger - more involved - items that will clearly require a bit more time, attention ... and money; money you didn't have in your bid.

Now, you really do feel that the second punchlist is unfair, but you don't want to risk alienating the general or owner (and for that matter - the architect) - with whom you'd like to conduct more work in the future, so you bite your lip - count slowly to ten (to bring your blood pressure down), accept the injustice and go to the phone to let your job foreman know he isn't finished. You then call the suppliers who are impacted by the items on the new list to get the ball rolling.

It takes two more weeks to complete list number two. When it's finished, it just so happens the architect is out of town, so "it'll be another week before he can get together with the owner to do a walk-through." Your final billing is now a month old. So are your sub and supplier bills that you received in the final month of the project. Your invoice sits - unpaid - on the general's desk. The general's invoice sits - unread - on the architect's desk. The walk-through happens, but it's two more weeks (he's a busy man you know) before the architect musters up the energy to finally - and reluctantly - approve payment (except, of course, for the money he's withheld for a few "concerns" that he still harbors) for the general contractor. He then sends it out by regular mail to the owner for his OK, processing and payment.

But, wouldn't you know it, the board (that approves the payment for the owner) meets only on the second Monday of every month and your request just missed getting on this month's meeting agenda. "So, I guess we'll have to wait until the next month" they tell you. At that time - assuming the board approves the payment - it'll be a mere matter of the 30 - 60 days (yes, the original agreement said 10, but that seems to have been forgotten) that it will take for the owner to actually mail the final check to the general. Then the general will release your money.

But, at least you can rest easy knowing that the suppliers to whom you owe money are being patient and understanding about having to wait three months for their money. So, of course, that's not a problem. I also sure they cheerfully handed over all of their final lien waivers (which the general required - via the architect - to process the final pay request) ... in light of the fact that they didn't know whether they'd be seeing their money before their 60-day window for filing a lien expired. Right?

The Joys of Contracting
That's what I mean by frustrating. But the truly scary part is that the punchlist is only one way that an otherwise profitable and successful masonry job can become derailed in the final (and most critical) stages. There are many other common closeout requirements that - if left unperformed - could jump up to plug the money conduit. Now at a point so late in the job, you likely have a lot invested in the project. You may have even extended your own money to cover interim payments to subs and suppliers. It's clearly no time to lose control of the revenue flow!

So, to insure that the payments keep coming (and particularly that crucial last payment), it becomes vital to understand and satisfy your responsibilities for closing out a construction project. You have to know what your responsibilities are, have procedures in place to handle their administration, and be able to anticipate potential roadblocks so as to allow yourself to quickly and efficiently handle any number of possible arguments that could possibly delay your final payout ... the very same payout that likely includes your company's entire profit line-item!

Project Close-out Requirements
And so, with this goal in mind, let's take a moment to examine some common requirements of the construction close-out process - and try to gain control over those elements that can often spell the difference between receiving your money now or later:

The Punchlist
Already alluded to above, the punchlist is probably the most familiar closeout procedure to most masonry contractors ... and maybe the most perplexing. A punchlist is a list - most often created by the owner and architect in tandem - of work items or deficiencies that are required to be completed and/or remedied by all contractors (general & subs) before a final payouts will be released. Obviously, this makes the punchlist a very important document - and one that can often end up being hotly disputed between the owner, architect, general, and masonry contractor.

And yet, I've noticed that these disputes generally don't center around that the punchlist itself exists - most reputable masonry contractors understand the importance of fulfilling final details and obligations - but rather, that the overall punchlist procedure itself is so undefined, inconsistent, and so-easily bastardized by an occasional inflamed ego or just plain animosity on the part of the architect and owner.

I've had jobs where I've received just one punchlist that included perhaps a dozen or so items, while at the same time, I've had other jobs (of similar scope, size, and complexity) that generated 3..4..5..and more punchlists, each containing many previously unknown (and growingly ambiguous) "deficiencies." In fact, punchlist directives can oft-times be so vague that it's difficult to discern the problem - let alone provide a remedy.

I recently finished a city hall project where the architect included in his punchlist phrases like "doesn't appear" and "doesn't seem [to be what the plans and specs had intended]." No further explanation or detail was offered. Appear? Seem? Apparently, some where along the line, mind-reading became a pre-requisite for becoming a construction masonry contractor!

The reality is that punchlist items can range from justifiable to ludicrous ... and other times, it simply doesn't matter. You see, even if you can prove that a particular item is absurd - you're still not out of the woods. Many an architect (who generally do most of the list), not willing to admit that they're in (horrifyingly embarrassing) error - and not wanting to show professional weakness in front of the owner - will simply fall back on the classic (say it with me...) "yes I know it doesn't make sense but I'm the architect and besides I'm holding your money" method of construction project management.

So, to protect yourself and your company, ask you general to insist on one punchlist. Then, you insist on one list from the general - and hold firm. If that means that everyone needs more time to work up the (one and only) list; fine. The point is, the punchlist process should (and needs to) have a conclusion that really is a conclusion. Let everyone know that you will be satisfying only one punchlist. Then, once that list is satisfied, have the general, architect, or owner (preferably all, but that just may not be possible) sign off on the work. This eliminates them coming back later for questionable problems. Yes, they may protest - but hold your ground! You do have some rights.

Project Record Drawings & Documents (As-builts)
At the end of most commercial building projects, you (the masonry contractor) are required to submit to the owner, via the general, a set(s) of record drawings that illustrate any deviations and differences to the plans and specs that occurred during the course of construction. These are referred to as as-built drawings and become important reference material for those future inhabitants of the building or project that you're creating. Most projects do encounter a number of changes along the line and it's crucial for the future inhabitants to be sure that - for instance - that the non-load bearing wall that their maintenance people are about to cut a door opening into wasn't changed to a load-bearing wall during construction.

Normal as-built procedure calls for each trade to take an original set of plans & specs and mark in red (or additional colors if appropriate for clarity) any and all changes that occurred during the course of construction, which relate to their own scope of work. The general or prime contractor (which could be the masonry contractor) then gathers the individual trade as-builts, adds in his own set, and compiles a master set of record drawings that are turned over to the owner at closeout.

Operations & Maintenance Manuals (O & M)
Often referred to as O & M Manuals, these are most often 3-ring bound, subject-segmented, collections of information regarding the primary plumbing, mechanical, and electrical equipment that was installed on the project. The manuals commonly include emergency instructions and procedures, warranty information, parts lists, wiring diagrams, cycling & inspection schedules, maintenance protocol, general product data, testing & balancing reports, fixture lamping schedules for lighting, and anything else relevant to the operation of a particular piece of equipment. Even shop drawings, generated during the actual construction, are often included as part of the O & M Manual. Now, for the most part, the masonry contractor would seldom be involved in O & M's.

There are basically 2 types of warranties submitted at the end of every project: product warranties and labor warranties. Most of the time, warranting labor is simply a matter of creating a letter stating that your company will guarantee your workmanship for a specific period of time ... and then honoring the commitment. Though one year (after the project is complete) is a common time period, you could be required (by the original project specification) to provide coverage for more or less than the one year period.

Collecting and assembling product warranties can be a bit more involved, but still relatively straight-forward. Most often, product warranty information will be provided with the equipment when it's delivered, so it becomes more an exercise in gathering up all of the individual pieces and then organizing them in a way - generally according to CSI division - that can be accessed and understood in the future, should the need arise.

Final Inspections
Inspections occur throughout the entire construction process - not just at closeout - but at some point, someone will ask for final inspection documentation. So you better be ready. This not only includes general construction inspections, but also encompasses all of the mechanical, plumbing, and electrical inspections that are generally required by the governing bodies.

Final Cleaning
In most commercial construction specifications, the general contractor is required to include the final cleaning in his scope of work. You, the masonry contractor, will also likely be responsible to clean up after your own operations. This includes not only the building(s), but also the associated site and adjacent properties (if your building debris has blown past the lot lines.) Clean-up can be a substantial undertaking - and can run into big dollars for everyone. Common cleaning responsibilities on a project include the building surfaces (which will likely involve you), glass & glazing (including the often laborious task of scraping the labels off the windows), all floor coverings, raking and general cleanup of the outside, and much more.

Removal of Temporary Constructions
This most often includes temporary enclosures for protecting the public or for winter weather constructions designed to retain heat while performing cold-weather masonry. But for others, it could also involve the removal of a temporary access road, a mock-up created during the submittal process, temporary electric & pole, and any other fabrications that won't be a part of the final product.

Coordinating the Closeout Activities of Subs & Suppliers
The masonry contractor has his own set of close-out activities that he must perform, but in addition, he may also have another responsibility: to insure that all of his appropriate subs and suppliers provide the closeout material required of their scope of work. The absence of one of these items may also stop the money flow, and that's what we're all trying to avoid. For the mason, this might include items such as product warranties, material lien waivers, additional stock requirements, and more. These closeout responsibilities are described in the individual (CSI) trade specification sections in the manual that often accompanies the working drawings for the project.

Training for Customer's Employees
Again, this doesn't normally effect the masonry contractor as much, but this requirement includes providing training for the customer's employees regarding the start-up/shut-down, emergency procedures and operations, how to adjust for excessive noise and vibration, general safety procedures, economy and efficiency strategies, and effective energy utilization of new (and unfamiliar) equipment or systems. Chances are, if you ever did have any responsibility along this line, it would likely be in the cleaning and maintenance of the masonry surfaces.

Providing Extra Stock to the Customer for the Future
Particularly in commercial construction, you are often required by the specification to supply the owner with a certain amount of additional stock or product to allow for future maintenance and repair. Common items include providing additional roofing materials (shingles), acoustical ceiling tiles, floor tiles, paint (mixed to the colors used on the project), but additional brick (for future replacement) could be a requirement as well. Basically, these are normally products that could possible be discontinued - or hard to acquire - in the future.

Administrative & Accounting
This is more of the classic "office-work" and includes the preparation and submission of final pay requests (along with the critical supporting documents such as final lien waivers, affidavits, & change orders), release of retainages (money commonly withheld as a contingency from your subs or suppliers, if applicable), liquidated damages settlements, change-order reconciliation (which often comes at the very last moment) and any other accounting or payment calculations.

Miscellaneous & Sundry Close-out Items
There are scores of other items that could potentially be required at closeout and the only way you're ever really going to know what they are is by reading the specification manual; including division 4 (Masonry), division 7 (insulations), and division 1 (General Requirements). In addition to the things we've already discussed, you could also be responsible to turn over project photographs or damage/settlement claims that occurred during construction.

In The End ...
One other hint: by keeping detailed and consistent daily & weekly job records and logs, you greatly ease the burden of scrambling around for information at close-out time - particularly when it comes to satisfyng arguable punchlist items or sorting out (often disputed) last-minute change-orders. The information in these field records will almost always assist those who are trying to reconcile a situation that may have roots dating back six months ago.

Like most everything else in construction, the most essential part of providing effective and expedient closeout for a project is knowing what your responsibilities are in the first place. The good news is that these responsibilities are normally listed for you in the specification manual that accompanies the plan (if there is one). But, aside from that, I hope this piece may act as a guidepost with which you may begin to structure your own close-out program. Good luck!

About the Author

With over 25 years in construction, primarily as an estimator and project manager, Steve Saucerman now writes, speaks and consults for the construction industry. He also teaches part-time in the Building Construction Technology division for Rock Valley College in Rockford, Ill. He has published two books and over 350 articles to date and his writing is featured in construction periodicals all over the world.


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