Contract Closeout

Volume 5, Chapter 18

INTRODUCTION

The University standard contract documents have been developed to provide University Facilities with necessary forms, data, and procedures to complete a project. This chapter reviews the procedures required to complete the construction project.

(See Substantial Completion and Contract Closeout flowchart.)

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18.1 AS-BUILT DOCUMENTS

References: - Long Form, General Conditions.

As-built documents are copies of the Drawings, Specifications, and all other contract documents that have been updated by the contractor to reflect changes that occurred since these documents were issued to bidders. Changes could have been made by addendum, field order, change order, or by the contractor's actual construction. The contractor is responsible for ensuring that all changes are documented on the as-built copy of the contract documents kept at the project site.

The contractor is required to deliver the as-built documents to the University's Representative as a condition for final payment and the release of retention (see 18.6). The design professional, who may also be the University's Representative, is required to complete the record documents, stamp and sign the documents and deliver them to the University.

Completed record documents provide a record of the project as it was actually constructed.

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18.2 OPERATING AND MAINTENANCE DATA

The University's Representative is responsible for receiving operating and maintenance data from the contractor and for ensuring that the data are complete. When complete, the operating and maintenance data are delivered by the University's Representative to the Facility.

Operating and maintenance data are information about the equipment incorporated in the project. Data should include the following:

  • Identification of equipment installed.
  • Maintenance procedures for each system and each equipment item.
  • Spare parts lists indicating where parts may be obtained. Included should be the parts firm's name, address, telephone number, and the name of a contact person.
  • Installer name, address, telephone number, and the name of a contact person.

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18.3 GUARANTEES

References: - Long Form, General Conditions.
- Long Form, Specifications, Section 01740.

General Conditions, Paragraph 12.2, requires the contractor to correct defective work that becomes apparent during the progress of the work or during the Guarantee to Repair Period. The Guarantee to Repair Period is a period of one year commencing with the date of Beneficial Occupancy, the date of Substantial Completion, or the date of Final Completion, as applicable. A Guarantee to Repair Period longer than one year may be specified. Note that this Repair Period does not limit subsequent claims for patent and latent defects. Contact the Office of the General Counsel for post-guarantee period defective work issues.

18.3.1 Special Guarantees

Frequently, the Guarantee to Repair Period for selected items is desired for a period of time longer than one year. In these cases, the Guarantee form included in Specifications, Section 01740, must be used. The University's Representative must check each section of the Specifications to determine if an individual section requires a special guarantee to be submitted. The University's Representative is responsible for assembling and supplying all special guarantees to the Facility.

18.4 FINAL COMPLETION

References: - Long Form, General Conditions.

The University's Representative performs a final inspection upon receipt of written notice from the contractor that the work is ready for final inspection and acceptance.

Final Completion shall be when the University's Representative accepts the work as fully completed and in accordance with the contract documents and that a Certificate of Occupancy has been issued by the University's Building Official. The Facility must file a Notice of Completion (see 18.5) within 15 days after the date of Final Completion. The date of Final Completion is entered on the Notice of Completion.

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18.5 NOTICE OF COMPLETION

References: 

- Long Form, General Conditions.

- California Civil Code sections 9200-9208, 9356.

The Facility must file a Notice of Completion for contracts over $25,000 according to the following procedures and stipulations:

Where to File. Record the Notice of Completion at the County Recorder's Office for the county in which the project is located, and place within the Project file.

Form to Use. A Notice of Completion form with three versions depending on University's role (owner or lessee) is part of each contract family; only one must be filed and should be used as appropriate for the chosen delivery method.

Select the correct version of the Notice of Completion based on the following project scenario:

  • University owns the land and the improvements.(typical)
  • University is less than fee owner (e.g., lease).
  • University owns land but not improvements.

Time for Filing. Record the Notice of Completion within 15 days after Final Completion (see 18.4). If the Notice of Completion cannot be recorded within 15 days after Final Completion, it should not be recorded. It must, however, still be placed in the Project file and forwarded to the contractor to comply with various requirements in the General Conditions.

Completed Work. The filed Notice of Completion signifies that the work has been completed according to the terms of the contract.

Completion Includes All Work. All work includes final cleaning (see 17.2), punch list items, operating manuals, as-built documents, warranties, guarantees, and work added by change order. The person signing the Notice of Completion is responsible for determining that the work has actually been completed. The facts stated in the Notice of Completion are declared to be true and correct under penalty of perjury by the person executing the document on behalf of the University.

The contractor has no obligation to complete work after a Notice of Completion has been filed. If work required by the contract documents is performed after a Notice of Completion has been filed, the notice is invalid, leaving the Facility vulnerable, since work has been certified as received and warranty or guarantee periods have started. If the Facility wishes to file a Notice of Completion before all of the work of the contract has been completed, then the Facility must execute a deductive change order to exclude the incomplete work from the contract.

Outstanding Claims. Resolution of outstanding claims is not a condition of contract completion. File the Notice of Completion within 15 days after Final Completion even if outstanding claims are not yet resolved.

Stop Payment Notices. Filing the Notice of Completion or Notice of Cessation within 15 days of final completion starts the 30-day stop payment notice period. If the Notice of Completion or Cessation is not filed within 15 days of Final Completion, the stop payment notice period is extended 60 days for a total of 90 days from the date of acceptance (Final Completion).

Effective July 1, 2012, the University is required to provide stop payment notice claimants with the date of acceptance (Final Completion) of the Project or the recordation of the Notice of Completion or Notice of Cessation. The Project Manager must inform the Campus Plant Accountant of the status of acceptance (Final Completion) and of recordation of the Notice of Completion or Notice of Cessation within fifteen (15) days of acceptance (Final Completion) of the Project. 

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18.6 FINAL PAYMENT AND RELEASE OF RETENTION

References: - Long Form, General Conditions.

When the work is found to be complete, the contractor makes a final Application for Payment (see 15.3). The University's Representative then issues a final Certificate for Payment (see 15.4) constituting final acceptance of the work by the University.

Final payment and any remaining retention (see 15.5.3) becomes due after the contractor submits the following to the University's Representative:

  • Final Application for Payment and all required submittals.
  • Conditional releases from contractor and subcontractors entitled to receive any portion of the final payment (see Exhibits, FM4[II]). (optional)
  • As-built documents (see 18.1).
  • All operating and maintenance data for equipment installed in the project (see 18.2).
  • All guarantees (see 19.3) and warranties from the contractor, from subcontractors, and from suppliers.
  • All other submittals required by the contract documents.

The final payment shall be paid not more than 10 days after University's Representative issues the final Certificate for Payment. Retention shall be released 35 days after the Notice of Completion is recorded (see 18.5).

Acceptance of final payment by the contractor constitutes a waiver of all claims except those previously made in writing and identified by the contractor as unsettled at the time of final Application for Payment.

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18.7 STOP PAYMENT NOTICES

References: - Long Form, General Conditions.
- University of California Policy AM-P-415-6, "Plant Accounting: Stop Payment Notices, Prevailing Wage Claims, Assignments, and Liens."

A stop payment notice is a legal notice submitted to the University by a construction subcontractor, supplier, manufacturer, distributor, or another party to withhold amounts due the contractor in an amount sufficient to satisfy stop payment claims regarding labor and materials furnished to the contractor for the work.

Stop payment notices are processed by the Facility's accounting office, and stop payment notice procedures are given in the University of California Accounting Manual. Stop payment notices received by the Facility must be sent in a timely fashion to the Facility's accounting office. The Facility withholds funds equal to 125 percent of the stop payment notice amount. The bidding documents must specify the office name and address where stop payment notices and preliminary notices are to be received for the project. This information is to be included in the Project Directory.

Procedures for Stop Payment Notices with regard to plant accounting are available in the plant accounting policy document.

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Revision August 31, 2018 (FM Change # 18-006-P)

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