Practical Completion Flashcards
Define practical completion?
Practical Completion is a contractual term used in the Building Contract to signify the date on which a project is handed over to the client.
What might be typical conditions precedent for PC?
EPC in accordance with regs, H&S file, certificates of meeting building regulations, providing as built drawings relating to contractor’s design portion, building users guide, construction stage report.
What does de minimis refer to?
De minimis - Refers to points which are too small to be considered – minor defects dealt with using snagging list – where the consequences are insubstantial of a trifle.
Snagging should not bar a PC unless there are so many de minimis that they prevent the building being used for its intended purpose.
What activities are triggered as a consequence of PC?
The client takes possession and control of the building
Cessation of any further liability for delay damages, whether liquidated or unliquidated
Risk of loss or damage to the works passes to the client, which therefore terminates any further requirement on the contractor to insure and secure the works
Commencement of a defect’s liability/rectification or maintenance period
Milestone payment or release of retention monies
A requirement for a final account of the works to be prepared
Obligations under third party agreements such as funding arrangements, bonds, guarantees, leases, sale agreements etc.
How does the JCT treat PC?
‘Beneficial occupation’ was often used to describe the standard of completion that was required by the phrase ‘practical completion’, meaning the client is physically able to take occupation of the works and use them for their intended purpose.
The test of completion is, however, subject to a limited test of reasonableness known as the de minimis principle. This means that certification of completion of the works should not be refused if there are only very minor defects in the works.
How does the NEC treat PC?
Under the NEC form of contract, completion is defined as when all the work required by the ‘works information’ is completed by the specified completion date, and all notified defects that would prevent the client from using the works are corrected.
What is partial possession?
Sometimes the client will wish to take possession of part of the works even though this is not specifically anticipated by the contract documents. Partial possession can only be taken with the consent of the contractor but that consent may not usually be unreasonably withheld.
what is the difference between partial possession and sectional completion?
The important thing which distinguishes Partial Possession from Sectional Completion is that Partial Possession is used for early handover of an area of the works, which was not agreed formally before entering into contract.
Another key difference is that partial possession will amount to a variation under the JCT contract. This is because the partial possession changes the contractor’s ability to use the full site, and may affect the order in which the works have to be completed. Partial possession is therefore likely to have a cost implication, and the client will need to assess whether the cost of the variation outweighs the benefit of having early access to part of the site.
What is the effect partial possession?
Any part for which partial possession is given is deemed to have achieved practical completion.
Half of the retention for that part must be released.
The defects liability period (or rectification period) begins for that part.
Liquidated damages reduce proportionally.
The client is responsible for that part and should insure it.
When is a certificate of making good of defects issued?
Issued once all patent defects are made good.
Triggers final completion.
When is the Final Completion Certificate Issued?
At the end of defect rectification period, once all defects rectified.
Triggers payment of final retention monies.
What are typical pre-requisites to PC?
Where a health and safety file is to be produced, that the CDM co-ordinator is satisfied sufficient information has been provided by the contractor
The production of all the necessary testing and commissioning certificates
What is the difference between ‘snagging items’ and ‘outstanding works’?
If a snagging list is prepared, a distinction should be drawn between ‘outstanding’ works and ‘snagging’ items; if any works are outstanding then it is worth giving serious consideration to whether practical completion can, in fact, be granted.
What does the final certificate certify?
The final certificate is conclusive that all patent defects have been remedied, all adjustments to the contract sum have been agreed and all claims settled.
When is a certificate of non-completion issued and what is its effect?
The certificate of non-completion gives formal written notice to the contractor that they have failed to complete the works described in the contract by the completion date that was last agreed.
Issuing a non-completion certificate enables the client to deduct liquidated damages.
