Practical Completion, Sectional Completion and Partial Possession

Question 1

What is practical completion?

Answer 1

• The point at which all works described within the construction contract are complete, there are no patent defects except for minor defects that do not affect beneficial occupation and the contractor has supplied required for the health and safety file.

Question 2

When can practical completion be certified?
How did you decide when practical completion had been achieved?

Answer 2

• I issued practical completion when all works described within the construction contract were substantially complete and free of patent defects (other than minor snagging items that did not affect beneficial occupation and use).

Question 3

What is the impact of issuing practical completion?

Answer 3

• Rectification period begins.
• the contractor’s liability for liquidated damages ends
• Contractor is entitled to half of the retention monies. This puts the employer at significant risk, as the 2.5% retention is only intended to cover latent defects;
• possession of the site now passes to the employer, and the contractor will no longer cover the insurance of the works;
• the employer will be the ‘occupier’ for the purposes of the Occupiers’ Liability Acts 1957 and 1984 and may also be subject to health and safety claims.

Question 4

What is sectional completion?

Answer 4

• The point at which all works described within the construction contract for a specific section are complete and free of patent defects except for minor defects that do not affect beneficial occupation and use.

Question 5

What is the impact of issuing sectional completion?

Answer 5

• Contractor no longer has liability for insuring that part of the premises.
• Contract no longer has liability for liquidated damages for that section.
• Contractor is entitled to half of the retention monies for that section.
• Rectification period begins for that section.

Question 6

What is partial possession?

Answer 6

• Partial possession refers to the employer taking possession of or part of the site prior to completion subject to the contractor’s agreement. This is an ad-hoc procedure and not pre-determined within the contract documentation.

Question 7

What is the impact of issuing partial possession?

Answer 7

• Any part for which partial possession is given is deemed to have achieved practical completion.
• Contractor no longer has liability for insuring that part of the premises.
• Contractor no longer has liability for liquidated damages for that part meaning the liquidated damages are reduced proportionally.
• Contractor is entitled to half of the retention monies for that part.
• Rectification period for that part begins.

Question 8

Does the contractor have to consent to partial possession?

Answer 8

• The contractor does not have to allow partial possession if it would make works to the remaining areas to difficult to complete e.g. access routes are too difficult to achieve.
• The contractor cannot reasonably withhold permission.

Question 9

What is the difference between sectional completion and partial possession?

Answer 9

• Sectional completion refers a provision within construction contracts allowing the designation of different sections that may have different completion dates, rates of liquidated damages and rectification periods. Sectional completion is pre-determined and set within the contract documentation.
• Partial possession refers to the employer taking possession of a part of the site prior to completion subject to the contractor’s agreement. This is an ad-hoc procedure and not pre-determined within the contract documentation.