Understanding Practical Completion: A Key Milestone in Your Building Project

Practical completion marks a key milestone in any building project. It is the point at which the works are substantially complete and ready for use, though minor defects or unfinished items may remain. In ABIC contracts, the architect determines that it has been reached when the building is substantially finished, any remaining work is minor and will not impede occupation, all commissioning tests have been successfully completed, and relevant authority approvals have been obtained.

The Architect’s Role in Practical Completion

The architect is responsible for issuing the notice of practical completion once satisfied that the project has been completed in accordance with the contract. From the date of this notice, the owner can occupy the building and assumes responsibility for insuring it. If minor works remain, the notice will list these, but they do not prevent the building from being used. If the architect considers the works are not ready for practical completion, they will issue a notice detailing the outstanding items that must be completed before it can be granted.

Consequences of Practical Completion

The notice of practical completion carries important contractual and insurance implications. Occupying the building transfers responsibility for insurance from the contractor to the owner. Contractor risk insurance often expires at this point, so it is essential for the owner to arrange appropriate coverage to ensure continuous protection and compliance with the contract.

Practical completion may occasionally occur later than the date specified in the contract due to delays caused by the contractor. In such cases, liquidated damages may be payable to the owner, and the architect can advise on the procedure for claiming them. While owners may occupy the building before practical completion, this usually triggers practical completion automatically along with all associated contractual consequences. Staged practical completion can sometimes be negotiated to allow partial occupation without formally completing the project, but this should always be discussed with the architect.

Storing Goods Before Completion

Owners may wish to store goods or equipment on-site prior to practical completion. If this is identified early, it can often be accommodated without triggering practical completion or affecting contractual rights. Early communication with the architect is essential to manage this effectively.

Defects Liability

Following practical completion, the contractor remains responsible for remedying any defects that arise during the defects liability period specified in the contract. The architect conducts a final inspection prior to the end of this period to identify items requiring rectification. The contractor is then required to address these issues to the architect’s satisfaction.

The Final Certificate

Once all defects have been rectified, the architect issues the final certificate. This confirms the successful completion of the defects liability period. This formally concludes the contract between the owner and contractor. It also finalises any financial adjustments, including the release of retention funds.

Conclusion

Practical completion signals that a building is ready for use while ensuring that outstanding matters are managed professionally. Understanding this stage and working closely with your architect protects your interests. It also ensures a smooth transition from construction to occupation.

If you would like advice tailored to your project, please contact me for an obligation free consultation. 

Disclaimer: This blog is intended for general informational purposes only and does not constitute legal, financial, or professional advice. Every effort has been made to ensure the accuracy of the information provided. No responsibility is accepted for any errors, omissions, or consequences arising from its use. Readers should seek professional advice tailored to their specific circumstances before making decisions related to their building project or contract.