HVAC: Closing the Door on Never-ending Project Closeouts

New Horizons guide offers tips on making the process smoother and easier  

TOP: New Horizons guide
BELOW: Tom Martin Jr.

For Tom Martin Jr., one of the most frustrating experiences in his three-decade career involved a university lab and cleanroom project that seemed to drag on forever. 

The president of Cleveland mechanical contractor T.H. Martin Inc. said there were problems getting several components of the laboratory’s new HVAC system working properly, including the makeup air, fume hood exhaust and HVAC controls. 

“(We had) too much exhaust in one room, not enough air in another,” he said. “Our people weren’t really sure how these HVAC control systems worked, because we had never really worked with them before.” 

Solving those problems didn’t seem to bring the $5 million project any closer to completion, however. The general contractor and construction manager were always adding scope changes to the mechanical contractor’s to-do list.  

“It seemed like there were rounds of punch lists that drove us crazy,” he said. “They generate a punch list; we try to fix (the items on) it. Then as we’re working on getting it fixed, here comes another punch list or change request.

“It was just delay, delay, delay,” Martin said. "We thought we had everything fixed, everything running right.” 

Problem prevention 
Preventing other SMACNA members from experiencing the frustrations and delays Martin endured is among the goals of an upcoming publication from the New Horizons Foundation, “Effective Project Closeout for HVAC/Sheet Metal Contractors: Successful Practices Guide.”

Written by two Clemson University professors with insights drawn from in-depth interviews with 21 SMACNA members, the 28-page guide on streamlining the closeout process is broken down into two parts — one aimed at mechanical contractors and another aimed at sheet metal contractors. 

Sections cover common concerns during the closeout and turnover process, such as communication, technology and documentation. It also discusses aids that can make the task easier, such as software. 
Martin, a SMACNA national vice president and former board member, was part of the task force that helped draft the guide. 

In the case of the lab project, the constantly expanding punch lists delayed its close — and T.H. Martin’s payment — by almost three months. 

“And it held our retainage for an additional six months,” he added.  

Expensive delays
Altogether, Martin said, the long closeout on the project probably cost his company $50,000. He only budgeted a fifth of that amount for the process.

“As an owner, that drives you nuts,” he said.  “Planned and efficient project closeouts are so important in our industry.”

Martin’s experience is far from unique. According to the New Horizons study, “the closeout process tends to linger on way past project completion.” Every missed deadline risks delaying final payments, which can be crippling, especially for small and midsize construction firms.

“(Delays) can eat up their profit at the end of the job,” Martin said. “If they (contractors) don't look at or tighten up their policies and procedures on closeouts, it could definitely affect their bottom line.”

Unfortunately, many sheet metal contractors do not have any standard procedures at all when it comes to closing out projects, if the feedback from participants in the New Horizons study is any guide. Of the seven sheet metal companies interviewed by the Clemson professors, only one said it had a formal closeout process. However, company officials described it as a generic process. 

Mechanical contractors surveyed were more likely to have formal closeout procedures. Of the 14 mechanical contracting companies interviewed for the guide, 71% had established procedures. 

A common problem 
However, simply having procedures doesn’t mean that they’re implemented correctly, as the New Horizons guide noted. 

Martin agreed.

“It’s a big problem in the industry,” he said. “Our company, we do $50 million a year. Our sheet metal-only contractors that do maybe $5 million a year, they have some of the same problems. And then your national contractors, your huge contractors, they have problems as well. Everybody in our industry realizes that they can be more efficient, and they can tighten up their internal policies or procedures on project closeouts. The customer and owner appreciate efficient closeouts and timely turnovers, allowing use of the space.” 

The guide outlines seven general steps that sheet metal and mechanical contractors should implement to improve the project closeout experience:

Step 1. Identify your key project team participants (project manager, engineer, coordinator, supervisor, etc.) responsible for project closeouts. 
Step 2. Review current closeout process protocols and/or structure, if any.
Step 3. Talk to key team members to discover all the different closeout processes used at your company.  
Step 4. Compare them to create your company’s standard closeout process. See if the standard process differs from the one most used in practice. 
Step 5. Compare your standard process to the separate suggested procedures for mechanical contractors and sheet metal contractors. 
Step 6. Determine what activities from the model closeout process might be right for your company and its typical projects. 
Step 7. Update your existing, or create a documented new closeout process for your firm.

Martin said he endorses the guide’s suggestions. At T.H. Martin, they’ve learned the importance of having key people responsible for ensuring closeouts go smoothly.

“What we’ve tried to do is identify a savvy veteran journeyperson, who has a service background, who can be involved with some of the closeout paperwork, training and actually fix things on site if needed,” he said. 
Contractors who implement the suggestions in the New Horizons guide may find that in addition to streamlining project turnover, it also makes for happier clients, Martin said. 

“By and large, they like the proactive approach and the collaborative approach,” he added. “I think it speeds up things, expedites the punch list, correcting the punch list and getting things working per the design, and quicker turnover to the customer." 

And that’s good for business, he said.