What Is Practical Completion in Construction?

When it comes to construction projects, there are many important milestones along the way. One of these is practical completion, a term that refers to the point at which a building is considered to be finished and ready for use – “Practically complete”.

Let’s look at practical completion, achieving it, and what the different stakeholders need to know.

Understanding Practical Completion

Definition of Practical Completion

Practical completion, sometimes referred to as “PC”, is a term used in construction to describe the point in a construction project where the works have been completed in accordance with the contract, except for minor defects that do not materially affect the use of the building or structure. At this stage, the building or structure is considered fit for its intended purpose and can be occupied or used.

An example of this would be, that if you are building residential dwellings, the homes or flats are ready for the occupants to move in.

Practical completion is not just about finishing the construction work; it also involves ensuring that all the necessary paperwork and documentation are in order. This includes obtaining all the required approvals, certificates, and warranties for the building or structure to be occupied or used.

Importance of Practical Completion in Construction Projects

Practical completion is probably the critical milestone in any construction project. It signals the point at which the contractor’s obligation to build in accordance with the contract is complete, and the client can take possession and start using the building. It is also the point at which the liability for the building or structure passes from the contractor to the client.

Moreover, practical completion often triggers critical dates and obligations under the contract such as the release of retention and the start of the defects liability period. The defects liability period is a period after practical completion during which the contractor is responsible for rectifying any defects in the building or structure. This period is typically six to twelve months, depending on the contract terms.

During the defects liability period, the client has the right to notify the contractor of any defects that arise and request that they be rectified. The contractor is then obliged to remedy these defects within a reasonable period at no additional cost to the client.

It is important to note that the defects liability period is not a warranty period. It is a period during which the contractor is responsible for rectifying defects arising from their work. If defects occur after the defects liability period has ended, the client may have to bear the cost of rectifying them.

In conclusion, practical completion is a critical milestone in any construction project. It signals the point at which the building or structure is fit for its intended purpose and can be occupied or used. It also triggers critical dates and obligations under the contract, including the start of the defects liability period. It is essential for both the contractor and the client to understand the implications of practical completion and ensure that all necessary steps are taken to achieve it.

The Process of Achieving Practical Completion

Regarding construction projects, achieving practical completion is a significant milestone. It means that the building or structure is complete and ready for use. However, getting to this point involves several steps that need to be taken to ensure that the finished product is of the required standard. Let’s take a closer look at the process of achieving practical completion.

Pre-Completion Inspections

Before practical completion can be achieved, a pre-completion inspection must be carried out. This is typically done by the contractor and involves a thorough check of the building or structure to ensure that it has been constructed in accordance with the contract documents. During this inspection, the contractor will look for any defects or outstanding works that must be addressed before practical completion.

Some of the things that the contractor will check during the pre-completion inspection include the following:

• Checking that all works have been completed.
• Ensuring that materials and finishes are of the required standard.
• Checking that the building is clean and ready for occupation.

By carrying out this inspection, the contractor can ensure that the building or structure is ready for use and that no major defects or issues need to be addressed.

Identifying and Addressing Defects

If defects or outstanding works are identified during the pre-completion inspection, the contractor must address them before practical completion can be achieved. This may involve rectifying defects, completing outstanding works, or providing remedial action where necessary.

Addressing defects and outstanding works is an integral part of achieving practical completion, as it ensures that the building or structure is finished to the required standard and is ready for use.

Finalising Documentation and Certificates

Once all defects and outstanding works have been addressed, the contractor will prepare and submit any necessary documents and certificates to the client. These documents may include as-built drawings, operation and maintenance manuals, and warranties.

The client will review and approve these documents before practical completion. This is an important step, as it ensures the client has all the necessary information and documentation to operate and maintain the building or structure in the future.

In conclusion, achieving practical completion is a significant milestone in any construction project. By following these steps and ensuring that the building or structure is finished to the required standard, contractors can ensure that their clients are satisfied with the finished product.

Roles and Responsibilities of Key Stakeholders

The Contractor’s Role

The contractor is responsible for ensuring that the building or structure is completed in accordance with the contract, including achieving practical completion. This will involve managing the construction process, overseeing subcontractors, and coordinating with other stakeholders to ensure the works are completed to the required standard and within the agreed timeline.

The Client’s Role

The client is responsible for ensuring that the contractor’s obligations are met and that the building or structure fits its intended purpose. This will involve reviewing any works carried out by the contractor, identifying defects or outstanding works, and approving any necessary documentation and certificates. Once practical completion is achieved, the client can take possession of the building or structure and use it for its intended purpose.

Delays in Achieving Practical Completion

It is quite common that there are delays in achieving practical completion or even disputes over it as this triggers retention and the commencement of the Defects Liability Period.  Delays can have significant financial implications for both parties, as well as impact on the overall success of the project.

To avoid delays, it is essential for both parties to have a clear understanding of what “Practically Complete” means and to communicate regularly about any potential issues or delays. The contract should also include provisions for how delays will be handled, including any liquidated damages or extensions of time that may be applicable.

Conclusion

Practical completion is a critical milestone in any construction project.

It is the point at which the building is ready for use and multiple liabilities change between the Client and the Contractor. Understanding Practical Completion within a Construction Contract is crucial, as recent case law judgments highlight its definitive effect and meaning.

The decision of Practical Completion rests with the Employer/Client, and to determine Practical Completion, refer to the contract itself. Does it explicitly define Practical Completion? If so, that definition is the basis for awarding it; if not, start discussing this early.

About Paul Heming

Paul was a Quantity Surveyor who gained 10 years experience of managing £200 million worth of flagship UK projects, including 20 Fenchurch Street and Battersea Power Station. In 2015, Paul founded C-Link with the intention of sharing his expertise of managing major projects with the SME market.