Practical completion is one of the most important milestones in a construction project, marking the point at which a project has officially reached a stage where the works are capable of being used. Despite its importance, though, there is no universally accepted practical completion definition. As a result, the concept of practical completion frequently gives rise to hard-fought disputes between businesses operating in the construction industry.
If you are involved in a dispute over the practical completion of a construction project, seeking legal advice at an early stage can save you significant time and costs. At Altion Law, our specialist construction solicitors and barristers have extensive experience advising on construction contracts, disputes, and project delivery. We pride ourselves on offering decidedly commercial, pragmatic advice and on achieving our clients’ aims swiftly and with the minimum of disruption to their commercial activities.
For a confidential free discussion, call us today on 01908 414990, alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.
What Is Practical Completion?
In simple terms, practical completion occurs when the building or project is complete enough to be used as intended. Practical completion can be achieved despite minor defects or outstanding works, provided they do not prevent safe occupation or use.
Most standard form construction contracts, such as those produced by JCT or NEC, include provisions for practical completion. However, they often avoid giving a precise definition, instead leaving it to the contract administrator or other relevant professional to determine whether the works meet the required threshold. This enables the practical completion definition to be tailored to the specific project and accord with the commercial reality.
In practice, practical completion usually means the following:
- The works are finished except for minor defects and omissions.
- The building can be occupied or used for its intended purpose.
- All necessary approvals, certifications, and statutory requirements (such as fire safety compliance) have been met.
- Health and safety risks associated with unfinished works have been addressed.
Why is Practical Completion so important?
The achievement of practical completion has several significant legal and commercial consequences for a project and the businesses involved. They include the following:
- Once practical completion is achieved, the employer usually takes possession of the works. This shifts responsibilities for matters such as security, insurance, and maintenance from the contractor to the employer.
- Most construction contracts allow for part of the retention sum (usually half) to be released at practical completion.
- Liquidated damages typically cease at the date of practical completion. This means that, once that point is reached, the contractor is no longer liable for liquidated damages.
- The certification of practical completion typically triggers the start of the ‘defects liability period’ during which the contractor must return to remedy any defects identified by the employer post practical completion.
What sort of disputes does the concept of Practical Completion give rise to?
Practical completion gives rise to a significant number of disputes between businesses operating in the construction industry. For example, a common cause of such disputes is whether a defect is minor or substantial.
As a general rule, minor defects do not prevent practical completion from being achieved, whereas substantial ones can. Disputes frequently arise when contractors maintain that certain items are “minor defects,” while employers insist that they are significant enough to prevent practical completion from being achieved.
How can our Construction Litigation Solicitors help?
Practical completion is a key stage in all construction projects. It has a significant impact on key issues, such as risk allocation, payment, insurance, possession, and liability for defects. As a result, the concept is a major cause of disputes, particularly due to the lack of a universally accepted industry-wide practical completion definition. If not effectively managed from an early stage, these disputes can become extremely acrimonious and cause those involved to incur significant costs.
Our construction litigation solicitors frequently advise clients on whether specific defects might preclude practical completion. There is a large body of case law discussing whether specific defects should be classed as minor or substantial, of which we have a thorough understanding. However, each case essentially turns on its own facts, and our team will apply the relevant principles to your specific dispute to assess your legal position. In addition, if the construction contract contains a practical completion definition, that definition is crucial to understanding whether practical completion may have been achieved. For example, the contract may provide a precise definition of what constitutes “minor” or “substantial” defects. We will use our extensive legal knowledge, coupled with our experience in the construction industry, to advise you on the application of those contractual terms to your specific situation and explain how they impact the strength of your case.
For a confidential free discussion, call us today on 01908 414990, alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.
