Are we nearly there yet? Arriving at Practical Completion
Having set the date for the final site meeting and handover, the client suggested we shouldn’t bother with suit and tie, but, “Come in jeans; we’ll probably need to be on the end of a broom”. Another job going to the wire. This one was always going to be tight; with an immoveable deadline of holiday park guests arriving at the weekend. The pressure was on. Come that meeting, everyone’s eyes were on whether practical completion would be achieved, only too aware of the consequences should it not. *
As Contract Administrators under a JCT contract it is usually up to us to determine whether practical completion has been achieved, and we can’t rely on the contract itself for help. The JCT suite of contracts gives no definition for practical completion. So how do we determine when the construction works on a project have achieved completion in order to issue that all important practical completion certificate?
It is important to take each situation on a case by case basis, but generally we consider:
- are all the construction works complete, apart from minor defects or snagging?
- is the building capable of beneficial occupation and use?
We often have to use our professional judgement to determine if any defects are indeed minor or whether the extent of snagging is justification in itself to withhold certification.
Of course, the practical completion of a project is of commercial & legal importance. At practical completion:
- part of the retention (usually 50%) must be released to the contractor.
- the defects liability period begins.
- responsibility for damage and insurance passes from contractor to employer.
- claims by the employer for liquidated damages for delay come to an end, as does any claim for loss and expense on the part of the contractor.
- the limitation period for claims begins to run.
With so much at stake, the contact administrator can come under pressure from both parties, either to certify or to hold back. But as you would expect, whether we’ve turned up in suit or jeans and have broom in hand or not, it is what our professional judgement tells us that determines when the project has arrived at practical completion.
*For those of a nervous disposition, it was.