Best Practice for Clients – Contract Close-out

Avoid an extended commercial closeout

There must be an agreed set of criteria for plant acceptance and process for commercial handover.  As the plant approaches completion, snagging lists should be developed with both parties aiming to identify all items required for the plant to meet the specification.  This can be facilitated by joint walk-downs.  Avoid as far as possible “creeping” lists.   New items that arise once the plant has been taken into commercial operation are warranty items and should be dealt with under the warranty provisions of the contract.

Clients should not withhold money properly payable to the contractor on completion.  Contractors however should realise that clients often have difficulty retaining the attention of the contractor once the plant has been taken over. They may exercise their entitlement under the contract to retain money to ensure that the contractor finishes the work even if the contractor considers the retention to be disproportionate to the value of the remaining work.