Practical Completion

Practical Completion minimising the pain

Richard Davies
CIBSE Home Counties SE Region

1 Practical Completion minimising the pain

 Practical Completion

What is Practical Completion?

A certificate of Practical Completion marks the point at

which the Contractor has completed his contractual
obligations, and can hand over the Works to the client.

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 Practical Completion

At Practical Completion:
The Contractor gives up possession of the site to the
client
The Client becomes the building owner and
becomes responsible for insurance, security and
maintenance
A proportion of the retention monies are released
Liability for liquidated damages ends
The Defects Liability period begins

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 Practical Completion

What should happen at Practical Completion:

The Contractor hands over a building in which each
of the statutory approvals have been met
The Health & Safety file, a full set of Operation &
Maintenance manuals, record drawings and test
data and the Building Log Book is handed over
A comprehensive maintenance regime starts
The building owner has a full understanding as to
how the building operates

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 Practical Completion : contractors objective

Why the contractor wants to achieve PC

Achieves milestones for release of retention monies

Avoids (or limits) exposure to financial penalties for
delay
No responsibility for site security or insurance
No more site attendances (Project managers, support
staff, site accommodation and welfare.)
Also start of the defects liability period.

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 Practical Completion : clients objective

Why a client may want to achieve PC

Satisfied that contractor has fulfilled his obligations
Business needs of organisation
(end of previous lease, competitive advantage)
Client takes possession PC by default

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Practical Completion minimising the pain
 Practical Completion : clients objective

Why a client may not want to achieve PC

Works incomplete
Works unsatisfactory
Works differ from brief/design
Systems not proven
Absence of statutory approvals (Building Control)
No tenant (cost of empty building)

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 Defining Practical Completion

How is Practical Completion formally defined?

Previously..

When in the opinion of the Architect, Practical

Completion of the Works is achieved, he shall
forthwith issue a certificate to that effect and Practical
Completion of the Works shall be deemed for all
purposes of this Contract to have taken place on the
day named in such certificate

JCT 80 Clause 17.1

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 Defining Practical Completion

How is Practical Completion formally defined?

Practical Completion takes place when the Project is complete
for all practical purposes and, in particular:
the relevant Statutory Requirements have been complied with
any necessary consents or approvals obtained;
Neither the existence nor the execution of any minor
outstanding works would affect its use;
Any stipulations identified by the Requirements as being
essential for Practical Completion have been satisfied: and
Cont.

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 Defining Practical Completion

How is Practical Completion formally defined?

Cont.
The health & safety file and all as built information and operating
& maintenance information required by this Contract to be
delivered at Practical Completion has been so delivered to the
Employer.
Joint Contracts Tribunal 2009

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 Defining Practical Completion

CASE LAW
It is the duty of the Contract Administrator to act as
arbiter (and not as the Employers agent)
Minor defects are acceptable at PC [although they
must not have Health & Safety implications]
Each engineering system must be substantially
complete
Practical means allowing for site conditions

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 Practical Completion : best practice

Best practice
All Works complete
Health & Safety file complete
All O&M manuals, test data, acceptance certificates, Record
drawings completed and signed off by the respective members of
the Design Team
All testing and system proving completed & accepted
All user training complete
All Keys handed over (and documented)
Used consumables replaced (filters, fuel) and spares handed over
(and documented)
Requirement for fine-tuning visits documented in spec. (BMS)

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 Practical Completion : best practice

Best practice / cont

Requirement for out-of-season system proving is clearly
defined (chillers and cooling towers to be demonstrated
during the summer months)
No patent defects
All snags completed
No outstanding issues

Result: happy client and prospect of repeat business

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 Practical Completion : real world

Real World
O&M manuals & record drawings incomplete
User training given to wrong people
Consumables not replaced: dirty filters not changed,
no fuel in the emergency generator tank
Outstanding defects not identified / documented
Snags not identified / documented

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 Practical Completion : real world

Real World typical issues

Contract Administrator not fully informed regarding
outstanding issues
Design team unable to identify potential show
stoppers
Contract Administrator unable to differentiate between
potential show-stoppers and snags
Client pressure

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 Practical Completion : best client practice

Best practice client actions

No influence upon the Contract Administrator
Building Manager familiar with building and its
operation
Building Insurances in place
Security arrangements in place
Maintenance contracts in place as required

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 Practical Completion: real world client actions

Real world client actions

Pressure on Contract Administrator to resist
Practical Completion
Building Manager not appointed, or wrong person
appointed
Maintenance contracts not in place confusion
between 12 months defects liability and 12 months
maintenance. They are not the same!

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 Practical Completion: real world client actions

Real World Practical Completion

Key test:
Risk to the safety of the occupants
Loss of enjoyment to the new occupants
Operational risk to the users, building fabric, plant & equipment
resulting from non-performance, under-performance or failure
of any of the M&E systems.

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 Practical Completion : requirements

Real World Practical Completion Requirements:

Health & Safety file
Signed NICEIC (or equivalent) electrical safety certificates
Signed NICEIC (or equivalent) fire alarm acceptance certificates
Signed sprinkler system acceptance certificates
Operation & Maintenance manual with sufficient information to
enable the safe operation of the building, including the
Mechanical & Electrical services
OR Commitment from contractor to provide full maintenance
cover.

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 Practical Completion : requirements

Real World Practical Completion: continued

Any outstanding Works to be identified, and a timescale for
completion agreed with both the client and the contractor
All snags identified, and the remedial action agreed together
with timescale for completing Works

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 Practical Completion : latent defects

Latent defects

Defects not apparent at time of completion, but subsequently

become apparent (eg: cracking of floor slab, rotting of timber)
Typically 12 months defects liability period, with contractor liable
for direct costs; remedial works and associated losses suffered by
client.

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 Practical Completion : Minimising the pain

Attachment to the Certificate of Practical Completion

Practical Completion is achieved conditional to the following:
The re-turfing of the front lawn during Spring 2014

The replacement of the damaged front door within four weeks

The chillers and cooling towers being demonstrated in Summer 2014

All items on the snag list (attached) being completed within the next
two weeks, with repainting in the stairs being undertaken at weekends
only

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 Practical Completion : Minimising the pain

Case Law:

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 Practical Completion : case law

J Jarvis & Sons v Westminster Corporation

these words [Practical Completion] mean completion for practical
purposes, ie. that for purpose of allowing the employer to take
possession of the Works and use them as intended
if completion means down to the last detail, however trivial and
unimportant, then clause 22 would be a penalty clause, and as such
unenforceable
one would normally say a task was practically completed when it is
almost, but not entirely, finished but Practical Completion suggests that it
is not the intended meaning, and what is meant is the completion of the
construction work that has been done

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 Practical Completion : case law

Crown Estates Commissioners v- John Mowlem & Co Ltd

(1994)
The ruling:
The final certificate is conclusive evidence that:
The [Contract Administrator] is satisfied with the standards of workmanship and
quality of the materials
The requirement has been satisfied for all works under the Contract

The implication:
The Contractor is relieved of responsibility to be responsible for materials and
workmanship used in executing the works.

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 Practical Completion : case law

Emson Eastern Ltd v EME Developments Ltd

The ruling:

The JCT has to be viewed in the light of conditions prevalent on building sites as a manufacturer. It
must be a rare new building on which every screw and every brush of paint is absolutely correct

.there is not room for completion as distinct from the Practical Completion. Because a building
can seldom, if ever, be built precisely as required by drawings and specification, the contract
realistically refers to practical completion and not completion, but they mean the same.

ifcompletion is something which only occurs after all defects, shrinkages and other faults have
been remediedit would make the liquidation damages provision . Unworkable and in practice
would require the defects liability period to be added to the time initially negotiated by the partners
for the carrying out of works.

The conclusion:

No difference between Practical Completion and Completion.

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 Practical Completion : case law

Big Island Contracting (HK) v Skink (1990)

The ruling:
Practical Completion could not be distinguished from substantial performance
and the contracted works were not completed until each of the systems were
operational
The implication:
Despite the value of the outstanding works being minor, the consequence was
significant (safety risk), and therefore it was correct to withhold Practical
Completion

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 Practical Completion - references

References:
-Defining completion of construction works,
RICS guidance note: 1st edition (GN 77/2011) - RICS Practice
Standards, UK
http://www.joinricsineurope.eu/uploads/files/Part7RICSDefiningcompletiononconstructionworksBla
ckBook_1.pdf

Handover, O&M Manuals, and Project Feedback. A toolkit for

designers and contractors (BG 1/2007) - BSRIA

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