Companion Guide to Video August 2012

www.fhwa.dot.gov/federal-aidessentials

Project Construction and Contract Administration

Project Management

Project Closeout

Project closeout is the process that “closes

out” the financial award for a local public 

agency (LPA) when all applicable 

administrative actions and required work of 

the project have been completed for a

Federal-aid highway project. As the LPA you 

will initiate the request for final payment to be 

reimbursed for expenses incurred for the 

project.

During the project closeout process , the 

oversight agency agrees that a project has 

been completed in accordance with the 

project authorization criteria as specified in 

the approved plans and specifications, 

including any authorized changes. Through 

this process, the oversight agency 

confirms that the completed project meets

all engineering, financial and other 

requirements that are tied to the use of

Federal funding. 

The three major steps in the project closeout 

process are:

1. Final Acceptance

2. Final Voucher

3. Records Retention

Completing these steps ensures the oversight 

agency that the work authorized on a 

Federal-aid construction project has been 

satisfactorily completed. These steps confirm 

that:

• All required documentation is in place

• A final payment for allowable project 

costs can be reimbursed

Final acceptance is the first step of the

project closeout process. Using existing

documentation, final acceptance is the stage 

in which the oversight agency reviews your 

records and determines if there are any

outstanding claims, unfinished work, or other

contract administration issues.

As the LPA, you are responsible for notifying

the oversight agency when your local 

Federal-aid project is completed and 

ready for final acceptance. A significant

This process "closes out" the financial award and helps ensure 

timely reimbursement of project costs
Federal-aid Essentials for Local Public Agencies

part of your project oversight and contract 

administration responsibilities is to maintain project 

records that support the oversight agency’s 

decision to accept a project. 

Supporting project documents are source

records, such as project inspector diaries, 

inspection reports, materials testing results and 

project management paperwork developed

throughout the life of the project.

Some of the most typical documents the

oversight agency will review to prepare the final 

acceptance report are:

• Final cost data to account for all project 

costs. In addition to the typical 

construction contract costs, your 

supporting documentation should also 

include accurate values for donated rightof-way, agency force account labor, and 

any additional costs incurred during the 

life of the project. Expenses that are 

claimed are checked to verify that all 

costs incurred on the construction project 

have been appropriately billed and are 

allowable based on Federal regulations. 

• A statement that construction has been 

completed. Most often, this is supported 

by a letter releasing the contractor from 

obligation for the contract.

• A materials certification, when 

appropriate, for projects constructed on a 

National Highway System route. This 

document certifies that all materials used 

in the construction of the project have 

been appropriately tested and inspected 

and meets the quality requirements 

specified in the contract. 

It is imperative that detailed, accurate, and

complete records are maintained to

enable a quick final acceptance review in 

advance of the next step—final voucher.

The second step of the project closeout

process is completion of thefinal voucher. In 

this step, the oversight agency initiates the final

financial transaction to reimburse your agency 

for project related expenses.

Similar to the final acceptance step,

processing the final voucher is the

responsibility of the oversight agency. 

Oversight agency decisions are based on the 

project records and paperwork that you submit. 

In this step, it is important that accurate and 

complete supporting project documentation has 

been submitted to the oversight agency. This 

expedites the process and contributes to the 

successful completion of the final voucher.

Final voucher transactions are processed and

approved by the local Federal 

Highway Administration ( FHWA)

division office. Usually, t he date you 

receive payment for project costs 

processed under the final voucher is the 

date the third step and final step—

records retention—begins. 

Records retention is the third and final step in

the project closeout process. This step is just 

as important as the first two. The project 

records you’ve collected and developed during

project construction and contract administration

have to be retained. Supporting 

documentation for your project must be 

securely filed and available upon request 

for audits or reviews by FHWA or other 

government officials. 

Federal regulation requires the retention of all

Federal-aid project records for a minimum

of three years following the last “action” on the

project by the local public agency. In most

cases, the last action is when you accept the

final reimbursement payment. An exception to 

this general statement is the closing of a
Federal-aid Essentials for Local Public Agencies

warranty on a project. This also constitutes an 

“action” that will restart the three-year retention 

timeframe. However, check your local and 

State statutes to determine if longer retention

periods apply.

As an LPA, for the project closeout process to 

work effectively: 

1. Maintain accurate and complete records 

and reports throughout the life of the local 

Federal-aid project so that the agency can 

complete final acceptance 

2. Initiate a final payment request following the 

completion of project construction to the 

oversight agency. 

3. Retain supporting project documentation for 

a minimum of three years to allow time for 

audits.

When good supporting documentation is created and 

maintained throughout the life of the project and 

these steps are followed, it will help to ensure a

smooth project closeout process and the 

successful reimbursement of costs.
Federal-aid Essentials for Local Public Agencies

The content of this 

document is not a 

substitute for

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range of 

requirements applicable 

to the scenario or this 

topic. This document 

was created under 

contract number 

DTFH63-11-F-00066 by 

the Federal Highway 

Administration, U.S. 

Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the 

importance of these 

necessary policies, 

procedures, and 

practices.

This companion resource 

is the script content for 

the video production of 

the same name. 

Additional Resources 

• Regulation for Federal-aid project authorization and handling of inactive 

project financial transactions and status

http://www.ecfr.gov/cgi/t/text/textidx?c=ecfr&rgn=div5&view=text&node=23:1.0.1.7.21&idno=23#23:1.0.1.7.

21.1

• Minimum requirements for National Highway System projects

http://www.ecfr.gov/cgi/t/text/textidx?c=ecfr&rgn=div5&view=text&node=23:1.0.1.7.25&idno=23

• Preferred FHWA-produced document for the final acceptance of a project

http://www.fhwa.dot.gov/construction/cpmi04gg.cfm

• Regulations on allowable costs of settlement agreements for contract 

claims

http://www.ecfr.gov/cgi-bin/textidx?c=ecfr&SID=6d873c5ca43e7f5dad67f4b2618b9add&rgn=div5&view=t

ext&node=23:1.0.1.2.2&idno=23