By standard contract Forms, punchlist is associated with the milestone for Substantial Completion or when the product of the contract is suitable for its intended use with only minor work remaining or as otherwise stated in the contract. In conjunction with the Buyer acknowledging the Seller achieved Substantial Completion, a Buyer inspection and the creation of a mutually agreed upon list of remaining work will be established. So what happens with the punchlist?
The punchlist becomes the baseline for the remaining work that the Seller is obligated to finish as part of the contract. Under usual circumstances, the Seller controls the area where the work is conducted. As a result, the Seller can complete punchlist with means and methods of choice and the timeframe to Construction Completion. However, if the Buyer decides to use portions of the work, the Seller's conditions for completing the remaining work need to be coordinated to avoid inconvenience to Buyer's employees and customers.
At the time of contract award the date for completing the punchlist is contained in the performance milestones, which can normally be found in the General Provisions. And the duration and date is commonly cited in the milestones for Construction Completion and Contract Completion.
At Construction Completion all construction, including all punchlist work, site restoration and demobilization, is completed by the Seller and confirmed by the Buyer. While the durations between Substantial Completion and Construction Completion can vary by the Contract scope, it will be what the Buyer and Seller consider reasonable, executable and achievable.
Once the punchlist is established, the Seller will schedule the manpower, equipment and materials needed to complete the work for construction completion. While it is anticipated to be minor work, scheduling activities to do the work depends on the scope of the punchlist item.
Scheduling also depends on the Buyer's use of the completed work. If the work is not in-use by the Buyer, the Seller's access will be guided by the hours allowed by the contract. However if the Buyer is using the work prior to Construction Completion, the hours may be restricted as dictated in conditions to the Seller for achieving Substantial Completion.
However, the Buyer’s full scale use of the work prior to Substantial Completion will present work conditions that were unanticipated at the time of Contract Award. This may create challenges that affect both parties in meeting milestones and in adjusting access for employees and customers in areas already in use. As a result, the Buyer and Seller may need to modify the approach to completing the punchlist work.
Similar to quality processes, like those for material review boards, punchlist items and the means and methods used by the Seller to complete the work needs to be evaluated by the Buyer. The Buyer's evaluation will determine if the Seller completes the punchlist item, if the Buyer will accept As-Is, or if someone else will do the work. While punchlist items may be considered minor, the work conditions for the Seller, and the Buyer's use of the work may require decisions by both parties to mutually reduce potential impacts to Seller achieving contract dates and the Buyer starting and maintaining operations.
Punchlist items may need to be classified as:
Some of the criteria for classifying the punchlist items include:
Punchlist items that are not completed by the Seller will likely require contractual adjustment with the Buyer so funding can be re-assigned for another party to do the work. This may include balancing the Buyer’s benefit of use with the challenges on the Seller to complete the punchlist.
TIP: Realizing the risk some punchlist items may be classified Accept As-Is, the Buyer’s project team and construction manager should ensure the Seller’s remaining work, especially items that could affect the Buyer’s early use of the total work, is completed prior to substantial completion.
TIP: Buyer should always be aware of the value of remaining work, including punchlist, and ensure the Seller ’s invoice requisitions are reduced so the remaining payment is equal to or larger than the cost breakdown assigned to the remaining work. This will aid the Buyer to implement contractual adjustments for punchlist work not completed.
TIP: Once contract progress achieves Substantial Completion, the Seller’s submission of a Detailed Contract Schedule (DCS) usually stops because the remaining work is not considered significant enough to deliver the DCS to the Buyer. As a result, the Buyer needs to establish an alternate method for the Seller to demonstrate a plan to the Buyer to manage and finish the work through Contract Completion.
TIP: While understandable, the Buyer’s construction manager is focused nearly entirely on Seller’s progress and compliance with the contract technical requirements – specification and drawings. To facilitate work post-substantial completion, the Buyer must ensure that the CM is aware of interdependent requirements contained in General Provisions, Special Conditions, Contract Addenda and other conditions established for award, and that the CM integrates these commercial requirements into management of Seller.
TIP: Depending on the scope of the Contract, the Seller’s progress may make segments read for intended use by the Buyer prior to all the work being completed. As a result, the Buyer and Seller may create a distinct punchlist for each segment, which will aid in the Buyer’s use prior to the Substantial Completion milestone.
A punchlist is most common in the construction industry. But it may be an overused term on prime contracts between Buyers and Sellers - when a simple To-Do-List might be more appropriate description for a tool construction managers (CM) use to monitor contractor progress toward achieving contract milestones.
Punchlist is not normally part of the definitions in the construction contract Form. As a result, Punchlist means different things to Sellers and Buyers.
From various sources of expertise, punchlist is described as:
Punchlist is interdependent with the progress of work by the Seller and the milestones specified by the Buyer in the Contract. The milestones are typically contained in the General Conditions/Provisions (GCs) of a contract document. Punchlist creation is associated with substantial completion and punchlist completion is associated with construction completion.
Punchlist work flow:
Most US standard contract Forms, cite the requirements for substantial completion and construction completion in the General Conditions/Provisions regarding section related to Performance Schedule and Payments.
Interfaces with other contract requirements in the work flow include: Item 4-After substantial completion, Seller and Buyer can initiate reconciliation of incentives and liquidated damages. Buyer can suspend consideration of all potential changes, instruct Seller to demobilize and to perform site restoration by the final completion/contract completion milestone, request Seller to submit deliverables such as O&M Manuals, As-Built Drawings Package and Warranties, and if applicable, release performance bonds. Item 5-After construction completion, Seller and Buyer can initiate the contract closeout. Item 7-After demobilization, Seller can reduce insurance coverage.
TIP: A punchlist should only be submitted once by Seller and reviewed by Buyer for completeness an accuracy. Thereafter, it is locked down. No items can be addressed. Items can only be verified as completed and closed.
TIP: All items on the punchlist should be addressed and closed by the Sellers within a period that avoids the risk of further damage or new conditions that requires corrective action.
TIP: For Buyer’s, including their construction managers, that require in-progress punchlists to assess the contractor’s physical work relative to the construction substantial completion milestone, a more granular definition of punchlist may be needed. Here are some proposed definitions that can provide guidance to Buyer and Seller as the punchlist changes with the progress of construction.
TIP: An observation listed on the punchlist should identify the inspecting agency/inspector name and date, cite the specific location (s) and the drawing/specification/code, and describe the needed correction to meet with the contract requirements, approved shop drawings or other industry standards for the type of work.
TIP: The punchlist observations should be actionable and the description begin with words such as repair, replace, adjust, touch-up, polish, remove, rebalance and clean. Items with words such as install, test, paint, fill, energize, backfill and connect may indicate that base scope is not yet completed.
This is the 14th in a series of discussions that is intended to prompt Project Teams to be aware of the entire contract document, including Information For Bidders (IFB), General Provisions/General Conditions/Terms and Conditions (GCs) and the Technical Requirements [Specifications and Drawings.]
Part 14 of Know the Contract is Contract Completion/Closeout. Closeout is the successor to all other work performed under the Contract and it is final set of activities between the Buyer and Seller. While the requirements for Closeout may be scattered throughout the Contract document, the most important are described in the GC’s sections related to Schedule and Payments. At this phase of the Contract, the Buyer’s Contracting Officer is the primary arbiter for determining that all requirements are met by the Seller and confirmed by the Buyer’s Project Manager.
Part 6-Schedule Performance and Part 7-Progress & Milestone Payments of this series describe the content in the typical contract Form. Satisfying these requirements precede completing the Closeout process and documentation, and includes substantiating completion of testing and start-up; training; delivering spare parts; submitting operation & maintenance manuals, software, as-built drawings, asset management data and warranty; and closure of all quality management processes and deliverables.
Regardless of the contracting method, such as Design-Bid-Build, Design Build and CM At Risk, the Closeout of the contract is governed by the GCs as well as any Special Conditions and terms negotiated for contract award. The typical activities and topics include:
During the Closeout phase, the Buyer may develop Lessons Learned from the Seller’s performance on the Contract. The Lessons Learned will be utilized by the Buyer to consider changes in requirements as well as management processes and documentation on future Contracts. Some of the topics from Lessons Learned may include:
TIP: The responsible parties for Closeout are the Buyer’s Project Manager with support from the Buyer’s Contracting Officer and the Seller’s Project Manager with support from the Seller’s prime contracting/procurement official.
TIP: While risking duplication of requirements, create a separate Division 1 specification covering the requirements and deliverables checklist for contract closeout.
TIP: Most US contract Forms were written based on paper transactions throughout the Contract cycle. Due to awareness of threats outside normal contract and project processes, security of products, deliverables and documentation is now part of controlling access to sensitive contract records. As a result, EDMS has replaced paper documents and is used more effectively to segregate, store and restrict distribution of documents that contain sensitive information.
TIP: The use of electronic document control system (EDMS) has become a critical part of managing and executing the work at a project and contract level. As a result, there may be a need to create requirements for content, format, compatibility and the transfer method of the Seller’s EDMS with the Buyer’s hardware, software and the organizational management of records.
TIP: Ensure Closeout requirements and terminology are well defined and are consistent with the process and requirements in the GCs. Clarity of terms is essential for both the Buyer and Seller.
TIP: Buyer’s Contracting Officer should provide clear guidance to the Buyer’s Project Manager on the process, timeline and documentation required to satisfy the contract closeout.
At the expenses of Buyer’s input regarding comments, clarifications, and managerial integration, the mantra on Mega Projects – many that include Design Build (DB) delivery, is to stay out of the Seller’s way, reinforce the risk owned by the Seller and avoid negatively affecting the Seller’s Production, Schedule Progress and End Date.
Projects using DB are also more susceptible to Buyer’s tendencies that replace the planned flexible collaboration with practices that minimize or soften Buyer’s feedback and that base decision making almost solely driven by perceived impact on Seller’s production metrics. All while the Buyer retains the position that the Seller is proceeding at its own risk regardless of the Buyer’s review of submittals, schedules and execution plans.
Additionally, Mega Projects by virtue of size, cost, duration and impact to a community or region become highly influenced by executives, funding agencies, government officials, communities and advocacy groups. The influencers may have their own biases and self interests to inject into the project environment through continuous affirmations on performance, such as “The project is on-budget, ahead of schedule and we are doing more work.”
Under this environment, managing projects or a program of projects will test the Buyer’s project management oversight and the strength of the Buyer’s project team and its strategy in managing the Seller. The strength and resourcefulness in the management strategy will affect the Seller’s compliance with the contract and in meeting the Buyer’s quality expectations for the products and deliverables at project completion.
It may not be what you want but it’s on time and on budget
Metrics are tools for assessing progress and for determining areas at risk for compliance with requirements for scope, cost, schedule, quality and safety. In order to implement project management plans, project teams identify and monitor Key Performance Indicators (KPIs.) This is no different than the tools and techniques in Project Management Institute’s (PMI’s) Project Management Body of Knowledge (PMBOK.) However, a large volume of metrics can distract teams from the main KPIs. Additionally, it also absorbs scarce resources and time to report, explain variances and develop actions for correcting under-performance or for making decisions from over-performance.
More so than any other project delivery method, DB projects are executed because of the benefits to the Buyer from the Seller’s use of innovative designs, alternative materials, unique means and methods, innovative use equipment and techniques, and the continuous implementation of aggressive scheduling for maximizing progress. However, DB projects are dependent on minimal input from the Buyer and the Project Manager (PM.) DB requires the Buyer to optimize basic management practices to avoid disrupting the Seller’s schedule. This may limit PM’s time and actions from thorough assessments of the Seller’s submittals, work progress and KPI trends. As a result, the focus on Production, Schedule Progress and End Date may overshadow the PMs diligent use of all the pertinent tools and techniques in project management including PMBOK knowledge areas and PMI’s practice standards.
Its about the Project and the Buyer
Once this type modus operandi is demonstrated on a project, there is a high risk all silos in the Buyer’s project management organization will proceed in isolation and focus exclusively on their KPIs. While Integration is an essential PMBOK Knowledge Area, it may be perceived as complicating processes and documentation, and therefore is a risk to scheduled progress by the Seller. It also dilutes the PM’s role as known from PMI’s foundation standard and best practices for project management. This creates an environment that works in favor of reporting uncontested metrics, and it ultimately fractures the Buyer’s authority and project management functions. But it may benefit the influencers, stakeholders and political officials seeking to exclusively report “The project is on-budget, ahead of schedule and we are doing more work.”
A PM’s assignment to a project includes a commitment to principles, due diligence and applying expertise to management processes and practices for all PMBOK Knowledge Areas:
Buyer’s, and their funding partners, expect PMs to be highly knowledgeable in project management and that he/she will oversee and continuously exercise effective managerial control, leadership and decision making across each Knowledge Area. The ideal PM should have significant experience on similar projects and delivery methods and be highly aware of the interfaces and interdependencies between each area – aka Integration. The Buyer must assure the selected PM is well rounded and highly skilled in adapting to the Buyer’s organization and the project business case This avoids potential risks from limitations in the PM’s project experience and expertise, including familiarity with the delivery method and contracting approach.
For the role of the project manager, PMI lists the following for knowledge and skills:
“The project manager is not expected to perform every role on the project, but should possess project management knowledge, technical knowledge, understanding and experience. The project manager provides the project team with leadership, planning, and coordination through communications. The project manager provides written communications (e.g. documented plans and schedules) and communicates in real time with the team using meetings and verbal or nonverbal cues.”
A PM that is a great communicator without strong experience of Integration with the other PMI Knowledge Areas may create blind spots. If the PM exclusively focuses on particular areas, shortfalls in management effectiveness will quickly manifest in poor KPIs and missed milestones.
On Mega Projects, the complexity of the Project team organization may create numerous dashboards and KPI metric tracing. While an effective tool, the volume of dashboards may obscure critical information on project performance and critical factors and issues. As a result, there is risk that project leadership misses trends in KPIs, which could otherwise be identified and managed with less dashboards but more targeted dashboard.
If you see a performance shortfall do something
ANSI – American National Standard complements PMI-PMBOK:
“In addition to any specific technical skills and general management proficiencies required for the project, project managers should have at least the following attributes:
On the other hand, if trends are not recognized, PMs need to diligently review and monitor underperforming, high performing or stagnant KPIs, be prepared to decide on recommendations for action, and to executive implementation plans. Eventually, PMs and project leadership will need to execute actions to improve poor and stagnant performance and to make decisions on opportunities from high performance.
PMs have a unique role and set of competencies that are attained through education, life time learning, project experience, job responsibilities, and certifications and licenses. Cumulatively, the quality of the PM’s services and deliverables has a direct impact on project performance, including Production, Schedule Progress and End Date. PMs and project teams with gaps in PMI Knowledge Areas will create unneeded risk throughout the project life cycle.
Credibility and Obligation to Buyer and Profession
Regardless of the project delivery method, PMs that do not recognize the interfaces and interdependencies between PMI knowledge areas may create unnecessary risk to project success. Project professionals are obligated to recognize shortcomings and plan accordingly to counter-balance the project team with needed Subject Matter Experts. As project management professionals, Project Managers and team members must understand the standards for their performance on projects.
PMI Code of Ethics for project practitioners is a global standard for project, program and portfolio management. The Code, which applies to all practitioners including those that do not have PMI Certification, is available at PMI.org.
Below is an excerpt of the relevant sections:
2.1 Description of Responsibility
Responsibility is our duty to take ownership for the decisions we make or fail to make, the actions we take or fail to take, and the consequences that result.
2.2 Responsibility: Aspirational Standards
As practitioners in the global project management community:
2.2.1 We make decisions and take actions based on the best interests of society, public safety, and the environment.
2.2.2 We accept only those assignments that are consistent with our background, experience, skills, and qualifications.
2.2.3 We fulfill the commitments that we undertake – we do what we say we will do.
2.2.4 When we make errors or omissions, we take ownership and make corrections promptly. When we discover errors or omissions caused by others, we communicate them to the appropriate body as soon they are discovered. We accept accountability for any issues resulting from our errors or omissions and any resulting consequences.
2.2.5 We protect proprietary or confidential information that has been entrusted to us.
2.2.6 We uphold this Code and hold each other accountable to it.
3.1 Description of Respect
Respect is our duty to show a high regard for ourselves, others, and the resources entrusted to us. Resources entrusted to us may include people, money, reputation, the safety of others, and natural or environmental resources. An environment of respect engenders trust, confidence, and performance excellence by fostering mutual cooperation—an environment where diverse perspectives and views are encouraged and valued.
3.2 Respect: Aspirational Standards
As practitioners in the global project management community:
3.2.1 We inform ourselves about the norms and customs of others and avoid engaging in behaviors they might consider disrespectful.
3.2.2 We listen to others’ points of view, seeking to understand them.
3.2.3 We approach directly those persons with whom we have a conflict or disagreement. 3.2.4 We conduct ourselves in a professional manner, even when it is not reciprocated.
4.1 Description of Fairness
Fairness is our duty to make decisions and act impartially and objectively. Our conduct must be free from competing self interest, prejudice, and favoritism.
4.2 Fairness: Aspirational Standards
As practitioners in the global project management community: PMI Code of Ethics and Professional Conduct
4.2.1 We demonstrate transparency in our decision-making process.
4.2.2 We constantly reexamine our impartiality and objectivity, taking corrective action as appropriate.
4.2.3 We provide equal access to information to those who are authorized to have that information.
4.2.4 We make opportunities equally available to qualified candidates.
5.1 Description of Honesty
Honesty is our duty to understand the truth and act in a truthful manner both in our communications and in our conduct.
5.2 Honesty: Aspirational Standards
As practitioners in the global project management community:
5.2.1 We earnestly seek to understand the truth.
5.2.2 We are truthful in our communications and in our conduct.
5.2.3 We provide accurate information in a timely manner.
5.2.4 We make commitments and promises, implied or explicit, in good faith.
5.2.5 We strive to create an environment in which others feel safe to tell the truth.
TIP: Buyer’s Standard Division 1 contract specifications for consultant services and for contractor products include Quality Management as a standalone requirement. No less important are the requirements for project management by consultants and contractors. Buyers should add specifications for project management requirements in contract documents.
TIP: Project Management Institute (PMI) is a standards, education and certifying organization that was created to advance the profession of project management throughout the globe. It is a primary source for project management requirements. Its standards and practices are developed by professionals with a wealth of project experience throughout the globe and across all industries.
TIP: Most Buyer’s contract proposal requirements provide a specific list of key persons and their respective qualifications and minimum experience on projects similar to the scope, value and duration of the contract scope. During the Buyer’s evaluation of proposals, the Seller’s PM should be evaluated and followed by an interview along with other key persons.
TIP: Ignorance and poor project management skills are not against the law. But it may affect the Buyer’s future access to government and private funding for the project, It is an obligation of the Buyers or their designee to adequately and diligently check qualification of companies and key personnel, and to diligently monitor the performance of consultants and contractors on projects. Buyer’s can not be silent to consultants and contractors that do not meet the performance standards and technical requirements in the respective contracts.
TIP: Projects will always have challenges. Not all of them may be resolved and end with Buyer’s satisfaction to scope, schedule and budget – PMI Triangle. During Lessons Learned processes, oversight consultants and project forensic professionals will focus on the adequacy, competence, and managerial effectiveness of the project management team, which can be the Buyer’s personnel or hired consultants.
Unfortunately for more times than I can count, the term “turnover” [or "handover"] has become commonly used to describe a process for the Seller to transfer contract products to the Buyer. Unless “turnover’ is defined in the Contract or clarified via Request For Information, the term is subject to arbitrary interpretation by Buyer and Seller.
In Contracts that are part of my rail transit project experience, “turnover” is not defined but it may be analogous to requirements for Substantial Completion (SC) and to Final Completion (FC). SC is the earliest date the Seller’s product meets its intended use by the Buyer. FC is latest date for the Seller meeting all requirements for Buyer’s final acceptance of the Seller’s work.
Substantial Completion is a contractual milestone that consists Buyer acknowledging Seller completion of work minus punchlist (minor repairs and touch ups) and the completed work is suitable for intended use and operation by the Buyer. Seller’s deliverables for SC includes Buyer’s review and acceptance of reports on all test and inspections, punchlist, closure of permits, issuance of certificate for occupancy/code compliance, completed submittals, and on resolution of Quality - Non Conformance Reports and Observations.
Final Completion is a contract milestone that consists of Buyer acknowledging Seller completion of all construction and all technical and contractual deliverables. Technical deliverables include Certificate of Construction Completion, Certificate of Construction Compliance, as-built drawings, O&M Manuals, warranty, training, software, spare parts, asset management. Contractual deliverables include final change orders, final payment, waiver of liens, confirmation of all payments for vendors and subcontractors, and reports on certified payroll and other reports for use of disadvantages and small businesses.
While not associated with “turnover”, Construction Completion is a contract milestone that consists of Buyer acknowledging Seller completion of the punchlist. This also includes directing the Seller to submit its invoice request for final payment on the balance of the 100% EVM in the payment schedule previously approved by the Buyer.
TIP: Project participants need to use only terms that are clearly defined in the Contract, and diligently avoid creating ambiguity by introducing terms outside of the Contract.
TIP: Contract milestones dates, definitions and processes for Notice by Seller to Buyer on completing the work to meet the milestone are described in Provisions Related to Time.
TIP: Contract payment definitions, deliverables and processes for Request by Seller to Buyer for payments are described in Provisions Related to Payments.
TIP: Requirements for technical deliverables are described in specifications that make up the technical portion of the Contract.
TIP: Requirements for deliverables content, format and timeframes for Seller’s submission and Buyer’s review are described in the Division 1 [general] specifications.
TIP: The Buyer’s Project Management Plan may be useful in establishing the activities, sequencing and timeframes for coordinating Seller’s delivery of spare parts and software.