ok then, your options are:
get the docmd.close line to work, this shouldn't be acting up as you say it is, you could try inserting this line with no arguments BEFORE the line which opens up form2 as docmd.close on its own closes the current object although the code in my previous post should work.
You could just hide form1 with form1.visible = false
I really do think that docmd.close acform, form_frmsearch
is the best option, when it pops up with an error click help instead and see if that gives you a hint as to why it's not working.
oh and the first line you've got up there doesn't look quite right, should there not be a load more commas before your openargs statement, I think it should look something like:
DoCmd.OpenForm Form_frmaddinspec,,,,,,OpenArgs:=strProject & ";" & strArea & ";" & strReference
as you seem to have the args in the section which tells it wether to open in design mode etc.