Contract closure process

Contract closure (Close Procurements) is the process of completing each project procurement. It involves verifying that all work and deliverables were acceptable, and carrying out administrative activities such as updating records and finalising claims. A contract is closed when both the buyer and the seller have fulfilled all their obligations. It supports the Close Project process and is part of the Closing process group.

Two parts

• Product verification: confirm that all work was completed correctly and satisfactorily.
• Administrative closure: update records to show the final results, finalise claims and file information for future use.

Contract close-out steps

1. Verify completion: check all deliverables against the contract terms and acceptance criteria (inspections, audits).
2. Get formal acceptance: the buyer gives the seller written notice that the contract is complete.
3. Resolve open issues and claims: settle unresolved claims and disputes through negotiation, mediation, arbitration or court, as the contract specifies.
4. Finalise payments: settle all invoices, and release the retention money and performance guarantee (bank guarantee) after the warranty/defect liability period.
5. Update records: record changes, contracts, correspondence and the final cost.
6. Transfer assets: hand over documents, source code, manuals, keys and equipment.
7. Evaluate the seller's performance for future selection.
8. Collect lessons learned and update organisational process assets.
9. Archive the complete procurement file.
10. Formally notify the seller of closure.

Verify deliverables -> Acceptance -> Settle claims
    -> Final payment -> Update records -> Archive

Inputs and tools

Inputs: project management plan, procurement documentation. Tools: procurement audits, negotiated settlements, records management system. Outputs: closed procurements, updates to OPA.

Early termination

If a contract ends early (because of default or by mutual agreement), closure still takes place, following the termination clause.

Example: After a vendor installs the campus network, the IT head tests it, signs the acceptance certificate, pays the balance after deducting a 5% retention that is released after the 1-year warranty, and archives all documents.