Practical Completion

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Practical Completion

Practical Completion – minimising the pain

Richard Davies

CIBSE Home Counties SE Region

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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 : contractor’s objective

Practical Completion – minimising the pain

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….)

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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

Practical Completion : client’s objective

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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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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

“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

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 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 : 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

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”.

“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 : 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 - referen

ces

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