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Practical completion is an important concept in the UK construction industry. It marks the point at which a project is considered finished.
It is a crucial milestone in any construction project, as it also marks the point at which the contractor is released from its contractual responsibilities in relation to the carrying out of the works.
For instance, the contractor will no longer have exclusive possession of the site, and if it is insuring the works, the responsibility to do so will fall away.
Is there a standard definition of practical completion?
In the UK, there is no standard definition of practical completion. It is generally considered to be the point at which the works are complete and can be occupied except for minor defects that can be dealt with without undue interference to the occupier. It is also the point at which the client can take possession of the completed building or works.
A building contract often includes a definition for practical completion, but generally, standard forms of the construction contract, including the JCT forms of contract, do not include a definition.
Building contracts and practical completion
Lawyers will often include a definition for practical completion along with a list of deliverables which are to be provided or satisfied by the contractor in order for practical completion to be achieved.
There will usually be a process under the building contract by which the contract administrator will confirm that the works have achieved practical completion and issue a certificate, and it is therefore usually left to the professional judgement of that person.
Process of achieving practical completion
The process of achieving practical completion usually involves the contractor and contract administrator carrying out an inspection and preparing a 'snagging list'.
This list will typically include any outstanding works, any defects that need to be addressed, and any other matters that need to be rectified before the works can be considered complete.
However, there will often be snags that need to be rectified before practical completion. In that case, a snagging list is attached to the practical completion certificate, even though standard form contracts do not provide for this.
Defects liability period
Practical completion also marks the start of the defects liability period, during which the contractor addresses any defective work or snags.
The retention
Finally, practical completion is also usually linked to the retention.
A proportion of the retention is generally released on practical completion, with the balance released on the expiry of the defects liability period.