Practical Completion
Practical Completion – minimising the pain
Richard Davies
CIBSE Home Counties SE Region
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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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
Practical Completion : contractor’s 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 – minimising the pain
Practical Completion : client’s 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 : client’s 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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Practical Completion – minimising the pain
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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Practical Completion – minimising the pain
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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Practical n – minimising the pain
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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Practical n – minimising the pain
Defining Practical Completion
CASE LAW
• It is the duty of the Contract Administrator to act as
arbiter (and not as the Employer’s 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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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 – minimising the pain
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
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
Practical Completion : Minimising the pain
Case Law:
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Practical Completion – minimising the pain
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 – minimising the pain
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 – minimising the pain
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”.
“if…completion is something which only occurs after all defects, shrinkages and other faults have
been remedied…it 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 – minimising the pain
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 – minimising the pain
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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Practical Completion – minimising the pain