2009 AACE International Transactions

PS.14 The Great Debate: Planning and Scheduling From Substantial to Final Completion
Christopher W. Carson, PSP, John C. Potter, PSP, Mark C. Sanders, PE CCE PSP, and John J. Stauffer PSP
ABSTRACTThe last one percent of a project can be the most difficult portion to execute. Substantial completion is often the first milestone associated with delay computations. The necessary work that completes the project allowing final completion is often referred to as punchlist work, but it is usually the last thing on the minds of the project management team at the beginning of a project, which means that it can be the most difficult portion of a project to schedule. Punchlist work can be a source of disputes regarding the final quality of the work, the timing of occupancy, the start of warranty periods, and the assessment of delay costs or liquidated damages. Many of these activities involve other terms used in scheduling, such as beneficial occupancy, building commissioning and final inspection, confusing the completion issues. In what has become a tradition at AACE International, the authors have prepared to debate these topics at the 2009 Annual Meeting. This paper presents an overview of the issues for the debate. Keywords: Completion, occupancy, planning, scheduling, and punchlist,

he meaning of the words substantial completion may vary from project to project. They may translate as mechanical completion, ready for occupancy, or opened to traffic. Some project participants may think of substantial completion as 99 percent complete, but what is included in the last one percent? Is it typically the continued performance of the last bit of scope under the base contract or is it more correction of quality issues and other re-work? While there is no universal definition for substantial completion in the construction industry (and certainly no standard definition that spans most industries where planning and scheduling concepts are used), there are certainly references that define the term. The following examples provide commonly used definitions:

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stage in the progress of the work where the work or designated portion is sufficiently complete in accordance with the contract documents so that the owner can occupy or use the work for its intended use AIA [1]. stage or designated portion of a construction project that is sufficiently complete in accordance with a contract for the owner to occupy and/or use it for its intended use, without undue interference businessdictionary.com [3]. Notwithstanding these definitions, personal experiences attest that substantial completion and beneficial occupancy are not always the same thing. For example, the contract documents for a recent condominium project defined a specific list of units and common areas that needed to be completed to achieve substantial completion. A temporary certificate of occupancy (TCO) was needed for the owner to begin moving tenants into the completed areas. During the project, the local building code official decided that a TCO for the areas defined in the contract could only be approved if work in additional areas was also completed. Of course, the officials actions were not governed by the contract documents. The following question was thereby raised: Could the contractor achieve substantial completion, despite the fact that the owner could not take occupancy? As noted by James B. Atkins and Grant A. Simpson, two Fellows of the AIA, fixing the date of substantial completion can have far-reaching contractual consequences. This date of reckoning defines the conditions that profoundly affect the risks and rewards of the owner, the architect, and the contractor. It decides when the owner will assume responsibility for operating and maintaining the building. It starts the clock on the statutes of limitation and repose for the architects liability. It initiates the warranties by the contractor for certain building products and systems, and it often determines obligations of the contractor for a penalty resulting from late completion or a bonus for finishing early. . . . When vested interests of the players are pitted against one another, this celebrated occasion can become a target-rich environment for mischievous activities as the parties attempt to reconcile their cost of doing business. Liquidated damage assessments, withheld payments, delayed guarantees, and debated utility bills are but a few of the moves that are sometimes made. [2] Scheduling Punchlist Work Figure 1 depicts common schedule logic between substantial and final completion. This provides little insight as to the activities that must be completed in order to turnover a facility and close-out the project. While not often included in project schedules, a more detailed list of tasks might include the following. substantial completion; beneficial occupancy; temporary certificate of occupancy;
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certificate of occupancy (permanent); building commissioning; final Inspection - local governing body; final Inspection client; punchlist creation; punchlist execution; final completion; and, project completion.

Estimating durations for these tasks might be challenging, as durations would be dependent on factors including the availability and diligence of specific team members, schedules of design professionals and local officials. In addition, the scope of work to be executed would be highly dependent on the quality of the work originally installed, and that scope of work might easily span across some of these completion terms without affecting the project acceptance. Strict adherence to specifications should result in minimal punchlist work, and under truly ideal conditions, the scope of punchlist work would be zero.

Substantial Punchlist

Final Completion

Figure 1Common Schedule Logic Between Substantial and Final Completion In reality, many of us have experienced projects that get to 99 percent complete and seem to stay that way foreveror at least until the last of the project management team moves on to a new project, retires, or dies! In extreme cases, the time to execute the last one percent of a project can be as long as the first 99 percent, which results in an earned-value curve like the one shown in figure 2.

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EARNED VALUE - BASELINE V. ACTUAL
120%

100.0%

100%
85.1%

95.0% 98.6% 98.9% 98.9% 99.1% 99.9% 99.9% 100.0% 96.7% 98.0% 98.1% 98.1% 91.1%

80%
69.1%

MONTHLY

69.3%

72.5%

60%
43.6%

55.1% 59.4%

40%
30.2% 33.9%

43.3%

20%
7.1% 0.0%

18.2% 19.9% 13.8%

0%

6.2%

Dec-05

Nov-05

Aug-05

Sep-05

Aug-06

May-05

May-06

BASELINE - Cumulative

ACTUAL - Cumulative

Figure 2Earned-Value Curve With a plan to accomplish about 12 percent of the work each month, leaving one month for the last five percent may not have seemed unreasonable at the time this project was planned. What happened such that the last five percent of the project took almost a year to complete? The last year might typically incorporate a cyclical process of punchlist development, minor mobilizations to execute the items on the punchlist, review by a design professional, and re-issuance of an updated punchlist. The items completed during that time might include touch-up painting, installation of minor finish items that were missing from an original order, or repair of work damaged accidentally. The contractor may also develop his own punchlist early in an effort to efficiently pursue quality control completion work before the owner takes occupancy. This can lead to trade contractors finding themselves in the position of having two or more completion or punchlists to address, at different times in the completion cycle. In any case, it may take one week or several weeks to schedule craft to arrive in the field, obtain the materials needed to correct the punchlist item, and conduct another review of the completed work by the design professional. All of the individuals involved might be working full-time on other projects, while closing out their last project in their spare time (optimistically assuming that they have some to spare). With significant slippage of non-critical path work, stacking of trades at the end of the project can make the completion activities take longer than planned, further complicating monitoring and analysis. Given the nature of punchlist work to linger for such a long period, it might be better to focus more attention for a shorter period, making an effort to close-out the project once and for all. Atkins and Simpson provide some best practices of this nature from the architects viewpoint. [2]

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Sep-06

Oct-05

Apr-05

Feb-05

Feb-06

Apr-06

Jul-05

Mar-05

Mar-06

Jun-05

Jan-06

Jun-06

Jan-05

Jul-06

0.0%

2009 AACE International Transactions

There are times when substantial completion occurs on schedule and punch list review time is reasonable. When substantial completion is successful, it is usually because of one or more of the following. reasonable original project schedule reasonable original contract sum deliberate and adequate contractors work plan capable team of trade contractors stable and timely sequence of owner decisions candid series of discussions among all parties well-documented construction process thorough and effective punch list schedule commitment to adequate work quality pre-planned closeout phase.

These recommendations imply that punchlist work should be executed before the architect provides a certification that the project is substantially complete (AIA Document G7042000, Architects Certificate of Substantial Completion). However, a TCO may be obtained and owner move-in activities may commence well before these activities are completed. Once there are personnel in the facility that are not employed by the contractor, responsibility for minor damages to completed work will become less clear. Turnover and Occupancy Some contracts proscribe a period of time after substantial completion to be used for punchlist work. Scheduling punchlist work before substantial completion may conflict with the terms of the contract in these cases, but might be acceptable to an owner that is prepared to take early possession of a facility. In other cases, early possession of a facility is of limited benefit to an owner. For example, a school district would have limited use for a facility that was completed prior to its planned move-in activities, and might not be prepared to commence security and maintenance activities for the facility. A power generator might not want to take possession of a back-end system prior to the terms required for the operation of that system by agreement with environmental authorities. In these cases, owners might prefer that the contract work be executed according to the schedule requirements defined in the contract and not earlier. In other cases, an owner might see benefit in reducing the risk of finishing late by planning to finish early, and thereby creating a buffer of float in the overall project schedule. The owner may even want to occupy the facility prior to the completion of all punchlist work. Once an owner begins to take possession of a facilitywhether it is a mechanical system, a building, or a roadit becomes necessary to coordinate with any contractor activities that may be ongoing. Construction managers coordinate owner and contractor activities on some projects, but some projects do not have any designated coordinator between owner and contractor personnel. If any damage to the new facility occurs during the overlap between punchlist work and move-in, an equitable separation of the cost of punchlist work required
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to fulfill the terms of the contract from the cost of repairing any damage that results from move-in activities may be required. To add another level of complexity, equipment that has been placed into service in preparation for final completion and turnover of the facility may fail, and additional contractors may be working on site under the terms of the equipment warranties. Timing of the start of warranties on that equipment dictate who is responsible for repair of that failure. Training on mechanical and other building commissioning takes place in this mix somewhere, with little incentive for the owner to take over maintenance until all training is completed. When multiple parties are working on site, responsibilities for damages, coordination of access and work spaces, and security issues may all need to be addressed. It is not likely that these issues will be taken into account in the initial planning of the work, as they are more often addressed if and when they arise. In summary, the final stage of a project can be a complex period in which responsibility for the care, custody, and control of a facility is changing hands. The last one percent of base contract work may be underway at the same time that design professionals are preparing the punchlist, the owner is commencing move-in, and warranty contractors or manufacturers representatives are working to correct unforeseen problems. While experience foretells that one or more of these issues are liable to jeopardize the timely completion of the project and trouble-free turnover, the details are not often considered in the initial planning of work. Spirited debate of these topics, such as that planned for the 2009 Annual Meeting of AACE International, will provide ideas as to how planning and scheduling professionals can improve the way that the last activities in a project are incorporated into the overall execution plan. REFERENCES 1. American Institute of Architects, Document A201-1997, General Conditions of the Contract for Construction, Section 9.8.1, and AIA Document G704-2000, Architects Certificate of Substantial Completion. 2. Atkins, James B., FAIA, and Simpson, Grant A., FAIA, Substantial Completion, Where Art Thou, AIArchitect, January 2006 3. Businessdictionary.com, January 2009, http://www.businessdictionary.com/definition/substantial-completion.html ABOUT THE AUTHORS Christopher W. Carson, PSP, is a director of project control with Alpha Corporation at Portsmouth, VA. He can be contacted by sending e-mail to: chris.carson@alphacorporation.com. John C. Potter, PSP, is a projects controls manager with Alpha Corporation at Seattle,WA. He can be contacted by sending e-mail to: john.potter@alphacorporation.com.

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Mark C. Sanders, PE CCE PSP, is principal with Alpha3 Consulting, LLC, of Glen Mills, PA. He can be contacted by sending e-mail to: msanders@comcast.com.

John J. Stauffer, PSP, is located in San Francisco, CA. He can be contacted by sending email to: johnstauffer@att.net.

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