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Public Works Project Closeout

This page provides a general overview of the required steps that local governments in Washington State must take to officially complete a public works contract, including notices of completion and retainage release.

It is part of MRSC's series on Public Works Contracts.

Project Closeout Stages

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 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.

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 the 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).

Practice Tip: The contract documents should clarify that for the purposes of the retainage statute (RCW 60.28.011), “completion of all contract work” is the same as “date of final acceptance” in the performance and payment bond statute (RCW 39.08.010). This means that the trigger date for retainage release will be the same as the trigger date for filing claims.

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 (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.

According to Washington’s Local Government Common Records Retention Schedule, construction project files must be retained for six years after completion of the project or the terms of grant agreement, whichever is later, then transferred to Washington State Archives for appraisal and selective retention (Disposition Authority Number GS50-18-10).

As-built drawings appraised and selected for archival preservation must be retained until completion of the project and then transferred to Washington State Archives for permanent retention (Disposition Authority Number GS50-18-06).

As-built drawings appraised and not selected for archival preservation by the Secretary of State must be retained by the agency as long as it owns the public work (Disposition Authority Number GS2012-035) .

Examples of Closeout Documents

For examples of documents related to public works project closeout, see the following:

For more sample documents regarding purchasing and contracting, see MRSC's Sample Document Library.

Last Modified: January 23, 2023