Practical completion marks an important milestone in construction projects. It is the stage at which the works are deemed substantially complete and capable of being used for their intended purpose.
Despite the significance of practical completion, the concept is not defined in standard construction contracts, like those produced by the Joint Contracts Tribunal (JCT), and nor is there any strict legal definition. As a result, whether or not practical completion has been achieved is a common cause of construction disputes.
At Altion Law, our construction disputes solicitors and barristers are experts in this niche, complex area of law. Our vast commercial experience enables us to translate complicated legal principles into practical advice aimed at assisting our clients in achieving their goals in the quickest and most cost-efficient way.
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?
Neither standard UK building contracts nor the law provides a straightforward definition of ‘practical completion’. That’s because whether a project is completed is largely a matter of fact and professional judgment, and the relevant criteria vary depending on the project.
The Courts have described practical completion as being achieved when the works have been completed for all practical purposes, and only minor snags, which do not impact the use of the building, remain outstanding.
Sometimes, the parties to a construction contract include terms in their contractual documentation addressing the point. Other times, they do not. Even if the parties seek to define when practical completion will be reached in their construction contract, the issue can still be contentious.
What are the effects of Practical Completion?
Practical completion triggers a number of crucial changes in a project. They include the following:
· The client takes possession of the works.
· The contractor’s liability to pay liquidated damages comes to an end.
· Half of the retention is released to the contractor.
· The Defects Liability Period commences. Crucially, the Defects Liability period is not intended as an opportunity for the contractor to address problems that were apparent at the time of practical completion. Rather, it is a period, usually of between six and twelve months, during which the contractor can be recalled to remedy any defects that come to light following practical completion.
What sort of disputes can Practical Completion give rise to?
Whether or not practical completion has been achieved is fertile ground for disputes between businesses operating in the construction industry. Generally speaking, contractors usually want practical completion to occur early so that their liability to pay liquidated damages ends, and half of the retention is released to them. On the other hand, employers usually want to delay practical completion so that they have more time to identify any defects, the contractor’s liability to pay liquidated damages continues, and they maintain leverage over the contractor.
Examples of the types of disputes that the concept of practical completion can give rise to include the following:
· Disputes over whether practical completion has occurred.
Disputes over whether practical completion has occurred are rife in the construction industry. The Court’s view is generally that practical completion can be achieved even if defects are present, provided that the building can still be safely and effectively used.
· Disputes over whether the defects are minor or substantial.
Minor defects do not generally prevent practical completion from being achieved, but substantial ones can. As might be expected, this general principle has been the cause of a considerable number of disputes between businesses operating in the construction industry, with parties disagreeing on whether a particular defect should be classed as ‘minor’ or ‘substantial’.
The case law on this issue is incredibly complicated, but some overarching principles can be gleaned.
They include the following:
· Practical completion does not require perfection. If, for example, the rooms within a building are slightly smaller than what was contractually agreed, practical completion may nevertheless have been achieved.
· Practical completion is primarily concerned with usability; if the building can be safely and effectively used, practical completion may have been achieved despite the presence of defects.
· If the defects prevent the building from being used normally, practical completion will likely not have been achieved.
· Whether practical completion has been achieved often comes down to the professional judgment of the contract administrator, unless their judgment is clearly unreasonable.
Assessing whether practical completion has occurred necessitates not only a thorough understanding of construction practices but also a deep familiarity with the relevant legal principles and their application. At Altion Law, the solicitors and barristers in our construction disputes team are vastly experienced in all matters of construction law, including disputes relating to practical completion, and are ideally placed to assist you in resolving your issue.
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.
