BUILD - 2018 Facilities Management Awards

Build 2018 Facilities Management Awards 8 Costigan King How employers and contractors can tackle the issue of practical completion early on to avoid future headaches, By Arianne King, CEO, Costigan King Earlier cases such as Westminster Corp v Jarvis and HW Nevill v William Press found that practical completion can be certified even when there is some work outstanding, but not if there are any patent defects. In the more recent case, Walter Lilly v Mackay, the court held that a determination of practical completion depends on “the nature, scope, and contractual definitions” of the works, as described by the parties or the architect, and that practical completion requirements can be relaxed by agreement between the parties. Considerations when defining practical completion Project specific practical completion Given the business and legal significance of practical completion, it certainly benefits both parties to the construction contract to define, or at least clarify, what practical completion means in a particular contract. In fact, parties to JCT contracts frequently do amend these contracts to include a definition of practical completion. However, it’s essential to remember that one size does not fit all. Each project is different – in size and conditions on-site, as well as materials, methods, and operations used. Parties must carefully consider these factors, as well as their goals and priorities, when defining practical completion for each build. Specifying the tasks required One tactic to defining practical completion is to detail the specific requirements which must be met by the contractor in order for practical completion to be certified. Although this approach may seem expedient to both parties – as the tasks the contractor must complete are mutually agreed and clearly stated – it can also subject the contractor to the risk that a failure to comply with even one minor condition will allow the employer to legitimately refuse to certify practical completion. When the parties have a mutual interest in timely completion, this may not be an issue, but in situations where an employer ractical completion is a well-known concept in the construction industry and is often referenced in the Joint Contracts Tribunal (JCT) templates – the most commonly used templates in the UK. The issuance of a certificate of practical completion marks a critical stage in any construction project because it signifies that the contractor has completed their contractual obligations (leaving aside minor items and/or snagging) and can hand over the works to the employer. Importantly, this handover usually also triggers a shift both in responsibilities and liabilities. Once the employer becomes the ‘building owner’, they are normally responsible for insurance, security and maintenance of the site and the contractor’s liability for liquidated damages ends. A part, often 50 percent, of the retention monies are released and the defects liability period begins. Despite its significance in the construction industry, the term is surprisingly still largely open to interpretation, with no precise legal definition of the phrase in the JCT suite of contracts and case law providing differing definitions. Practical completion: commonly used but poorly defined The only explanation of practical completion in the JCT suite of contracts is found in the JCT Major Project Construction Contract 2011 edition and states that “Practical Completion takes place when the project is complete for all practical purposes” and relevant statutory requirements have been complied with, only minor outstanding works that don’t affect its use remain, the employer’s stipulated requirements for practical completion have been satisfied, and the health and safety file and all ‘as built’ information and operating and maintenance manuals have been delivered. Because this definition leaves many factors unaddressed, case law on the subject has been an important guide for the construction industry. P How To Make Practical Completion Less Of A Headache