Public Works Project Closeout

Overview

Project closeout is the last phase of a public works contract. During closeout, construction is finished, financial administration is completed, project documents are archived, and the contractor officially turns the project over to the public agency (owner).

There are a number of stages to officially completing a public works project:

1. Substantial completion
2. Physical completion
3. Final acceptance
4. Notice of completion
5. Retainage release
6. Document retention and archiving

Each stage is described in more detail below.

1. Substantial Completion

Substantial completion occurs when all physical work is complete except for punch list items. In other words, this is the date that the contracting agency has full and unrestricted use of the facilities, both from an operational and safety standpoint. Only minor incidental work remains, such as replacement of temporary substitute facilities or minor corrections or repairs.

Liquidated damages may be applied if the contractor fails to meet this date.

2. Physical Completion

Physical completion occurs when all physical work is done and the contractor has left the site. However, there may still be some outstanding paperwork or documentation remaining.

3. Final Acceptance

Final acceptance occurs when the governing body (city council, board of county commissioners, etc.) or delegated officer formally accepts the work as complete.

Before this occurs, the contracting agency must verify that all documentation required by the contract and required by law has been furnished by the contractor, including approved prevailing wage statements and affidavits for the contractor and all subcontractors.

There is no statute directly addressing final acceptance. Instead, the requirement for the governing body or delegated officer to accept the work stems from RCW 39.08.030 regarding claims against performance and payment bonds, which states that:

[Claims against bonds must be filed] within thirty days from and after the completion of the contract with an acceptance of the work by the affirmative action of the board, council, commission, trustees, officer, or body acting for the state, county or municipality, or other public body, city, town or district… [emphasis added].

The inclusion of "officer, or body acting for" indicates that, at least for the purposes of this statute, the governing body can delegate authority to issue final acceptance.

Another statute, RCW 39.12.065, requires complaints regarding nonpayment of prevailing wages to be filed "no later than 60 days from the acceptance date of the public works project." For the purpose of that statute, WAC 296-127-020(1) defines the "acceptance date" as "the date that the awarding agency formally accepts the completed public works project pursuant to state law," but it does not say how the agency must accept the work.

Some agencies have delegated final acceptance for public works contracts based on dollar amounts, while others have delegated authority for most or all public works contracts.

Below are selected examples of final acceptance documents or policies:

Delegated Acceptance

• Lake Stevens Comprehensive Procurement Policy (2024) – Section 13: Purchase of Public Work Construction Activities authorizes city administrator to formally accept all projects as final; city administrator may discretionarily defer any final project acceptance to city council
• San Juan County Code Sec. 3.24.090 – County manager is authorized to accept completed work for public works projects within county budget
• Woodinville Purchasing Policies (2024) – Section II: Public Works authorizes city manager to accept contracts under $50,000; city council must accept contracts of $50,000 or more

Governing Body Acceptance 

• Arlington City Council Agenda Bill (2023) – Requests council move to approve final acceptance for intersection project; includes city engineer's letter indicating that project is physically complete and has no punch list items remaining
• Benton City Resolution No. 2025-31 (2025) – Accepts reservoir tank repair project as complete; authorizes retainage release upon verification of compliance with project specifications by public works director and clerk/treasurer
• North Bend Resolution No. 2156 (2025) – Accepts curb ramp construction project as complete; authorizes retainage release upon receipt of appropriate clearances from state agencies
• Prosser Resolution No. 24-1807 (2024) – Accepts street resurfacing project as complete and authorizes release of performance bond upon satisfactory fulfillment and completion of the specified requirements

4. Notice of Completion

After final acceptance of any project over $35,000, the agency must file a Notice of Completion (.pdf) with the Department of Revenue (DOR), Department of Labor and Industries (L&I), and Employment Security Department (ESD) (RCW 60.28.051).

Each state agency must approve the Notice of Completion separately, at which point each agency will send a certificate of release certifying that all applicable taxes, premiums, and penalties have been paid. If DOR, L&I, or ESD report that there are unpaid taxes or fees, the agency must pay the missing amount to the state within 10 days and subtract it from the retainage (RCW 60.28.060)

5. Retainage Release

The agency must release retainage to the contractor between 45 and 60 days after the "completion of all contract work," assuming there are no claims or liens against the retainage (RCW 60.28.011).

The contractor may also request the release of all retainage, minus 5% of landscaping costs, after the completion of all contract work except landscaping. Assuming there are no claims or liens against the retainage, the agency must release the money within 60 days of this request. See RCW 60.28.011(3)(a).

Before releasing retainage, the agency must have the following documents in its files:

• Statements of Intent to Pay Prevailing Wages, approved by L&I
• Affidavits of Wages Paid, approved by L&I
• And, for contracts over $35,000, the agency must also obtain these documents:
  • Certificate of Payment of State Excise Taxes by Public Works Contractor, issued by DOR
  • Certificate of Payment of Contribution, Penalties, and Interest on Public Works Contract, issued by ESD
  • Certificate of Release, issued by L&I Contract Release/Industrial Insurance

The agency should release the retainage in a timely manner to avoid monetary penalties and possible liability for attorney fees under chapter 39.76 RCW.

Workers, subcontractors, and suppliers must file any claims for outstanding wages or fees within 45 days of the completion of all contract work. All liens must be foreclosed in Superior Court within four months, or else the agency must release the retainage to the contractor (RCW 60.28.030).

If there are claims against the retainage, RCW 60.28.040 establishes the priority of the liens:

1. Workers not paid prevailing wages
2. DOR taxes due on the project
3. DOR taxes owed by the contractor on any other public works projects
4. ESD and L&I taxes due on the project
5. Subcontractors and suppliers
6. Other taxes due
7. The agency itself

If the total dollar value of all claims is less than the retainage, the agency must withhold the value of the claims but release the remainder of the retainage within the 60-day deadline.

If the total dollar value of all claims exceeds the retainage, the protections of the performance and payment bonds take effect.

6. Document Retention and Archiving

Typically, contractors maintain a set of “as-built” drawings (redlines) to track changes throughout the life of a public works project. An agency inspector and/or project manager checks periodically to make sure the as-builts are being properly maintained. The contract should state that the agency has the ability to withhold payment if the as-builts are not kept up.

At the completion of the project, the redline plans must be given to the inspector, who must verify that they are complete. The plans are then provided either to a design consultant or in-house design staff to incorporate the changes into the project’s electronic and archival files, and the inspector and project manager must review and sign the documents.

Design, construction, and project management records must be retained according to the state's Local Government Common Records Retention Schedule (CORE). In particular, see section 2.3 (Design and Construction).

For example, records relating to the design, new construction, or additions/remodels of "significant" buildings/facilities – courthouses, city halls, administrative buildings, libraries, fire stations, power stations, historic buildings, schools, etc. – must be retained for 6 years after completion or abandonment of the project, then transferred to the Washington State Archives for permanent retention. See DAN GS50-18-10.

Records relating to the design, new construction, or additions/remodels of "routine" buildings/facilities, including roads and other infrastructure, must be retained for 6 years after disposal of the asset or abandonment of the project, then destroyed. See DAN GS2024-007.

Records related to capital construction project administration and processes must be retained for 6 years after project completion/acceptance, then destroyed. This includes records such as phone lists, work requisitions, schedules, punch lists, and "red-line" drawings that have been superseded by "as-built" drawings. See DAN GS2024-006.

Examples of Closeout Checklists/Forms

Below are selected examples of checklists or forms related to public works project closeout:

MRSC/Mike Purdy Guidance

• MRSC Contract Closeout Paperwork and Deadline Summary (2015)
• Mike Purdy Closeout and Claims Against Bond and Retainage – PowerPoint slides

Templates and Checklists

• Camas Payroll Closeout Forms (2010)
• Port of Everett Construction Project Closeout Checklist (2023) – Includes items required for substantial completion, physical completion, final acceptance, and closeout as well as the responsible party for each item
• University of Washington Retainage Release Checklist (2006)