Practically complete?

Some of you may take the view that an employer's definition of practical completion is when it wishes to take up occupation. However much truth there may be in that definition, the law has adopted a more objective approach.

A legal definition

By way of example, the JCT intermediate form of building contract for works of simple content (IFC 98) places the authority and responsibility of determining the date of practical completion on the architect or contract administrator, depending on which category has been completed in the articles of agreement. However, there is no clear contractual definition of practical completion to assist the authorised certifier in assessing the position. The answer is not easy.

To paraphrase the legal authorities, the judicial view is that to say that works are almost but not entirely finished is insufficient to constitute practical completion. Completion of all the construction work that has to be done must have been done.

Non-patent defects should not prevent practical completion, but apparent defects do prevent it. Only if there are very minor unfinished works can practical completion be certified, otherwise no certificate should be issued.

However, the commercial pressure to finish a project is usually immense. In public sector projects, dates are critical for educational establishments. Infrastructure projects such as railways have limited working hours and tight deadlines. Certified completion beyond the original contractual completion date will cost all parties money. It can and does lead to intolerable pressure being placed on the certifier.

In summary, the definition of practical completion is stricter than most people may think and a job is not practically complete when contract works (other than very minor items) remain outstanding, however unimportant they are to the function of the building.

Moving the finishing line

As pressures mount to finish a job and it is becoming more apparent by the day that the project is running late, parties quite understandably try to find ways to get the job finished on time, either by trying to accelerate the works or by changing the definition of what meets the requirement of the employer for the purposes of getting people into the building, even if areas remain unfinished. Most standard form contracts do not refer to acceleration at all. Simply speeding up the works to get them back on timetable will not give a contractor an automatic entitlement to acceleration costs. It is vital to take great care in establishing the terms of any acceleration agreement and formally record its terms using appropriate advice.

The definition of practical completion is stricter than most people think

Another typical route is to enter into a supplementary agreement, in writing or otherwise, permitting occupation of the building by the employer, or indeed a third party, before practical completion. Terms such as "beneficial occupation" are often used, albeit these carry no legal or clear written meaning. Many a lawyer has been kept busy by the problems this sort of agreement can lead to, purely because the revised agreement has not been committed to document form or because the agreement itself has not anticipated some of the issues arising out of the changes agreed. Examples of such issues include the effect on liquidated damages in the contract and the requirement for finishing trades to work around people and/or equipment and consequent disruption to overall progress under the original building contract. Again, careful thought and advice at that stage can save a lot of cost and heartache later.

Practical considerations

Having attempted to define practical completion and identified some pitfalls for those who are trying to agree a way round the relatively strict interpretation given to it by the common law, here are some considerations regarding potential completion issues. The list is not exhaustive by any means and is in no particular order:

• For problems regarding the completion date, check the contractual procedure and abide by it, particularly in relation to requirements for written notices.

• A resolution of such issues by negotiation is always preferable but great care must be taken as to the terms of any settlement achieved and advice should be sought early to save costs later.

• Issues regarding the stage works have reached may arise. Be careful as to what site meeting minutes say about progress. It is not always clear what is meant by phrases such as "80% complete".

• Do not write letters promising what you cannot possibly deliver. It will come back to haunt you.