Practical completion

Practical completion does not mean every last item is finished. It means the works can be occupied and used as intended, with only minor defects or omissions left, and those remaining items do not prevent use or create a safety issue.

Most contracts also attach conditions. Common ones are passing commissioning tests, handing over operation and maintenance manuals, as-built drawings and certificates, and, for building work, obtaining the occupation certificate or equivalent approval. The exact definition is in the contract, so read it before you plan your handover.

For a deeper look, read Practical Completion in Construction: What It Actually Takes to Reach Handover.

• Liquidated damages stop. Liquidated damages run until the date of practical completion, not the date the last defect is fixed.

• Defects liability period starts. The clock for the defects liability period usually starts on the date of practical completion.

• Security reduces. Many contracts release part of the retention or bank guarantee at practical completion.

• Possession and risk pass. The principal takes possession, and responsibility for care of the works and insurance usually shifts.

• Payment. The contractor can claim the balance of the contract sum, less any security held.

Both standards define practical completion and set out a process where the contractor gives notice that it believes the works are complete, the superintendent inspects, and then either issues a certificate of practical completion or gives reasons and lists what remains.

• AS 4000-1997. Practical completion is defined in clause 1, Interpretation, and the process sits in clause 34, Time and progress.

• Your contract. Check for special conditions that add items to the definition, such as authority approvals or specific documents.

Plan the run to practical completion months ahead, not in the final fortnight. Start by reading the contract definition and listing every test, certificate and document it requires.

• Commissioning. Programme commissioning and witness testing of services early enough to fix issues before the inspection.

• Authority approvals. Book the final inspections needed for the occupation certificate or equivalent approval, and allow time for re-inspections.

• Handover documents. Collect O&M manuals, warranties, as-built drawings and compliance certificates from subcontractors as their work finishes.

• Pre-inspection walk. Do your own defect walk with key subcontractors before inviting the superintendent, and close out as much as you can.

• Written notice. Give written notice requesting the practical completion inspection in the form the contract requires.

• Leaving handover documents to the end. Missing O&M manuals, warranties or certificates are a common reason certificates are refused.

• Arguing over minor items. Agree early what counts as minor and record outstanding items on a defect list attached to the certificate.

• Not giving written notice. Most contracts need the contractor to request inspection in writing. Without it the process may not start.

• Losing track of the dates. Practical completion starts the defects liability period and timing for security release, so record the certified date carefully.