Practical Completion doesn’t mean the Contractor has finished the Works in every detail.

It means the
Works are sufficiently complete to be safely used by the Employer for the purpose he intended.

The Contractor may still complete minor items and fix defects after Practical Completion, as long as the
Employer isn’t inconvenienced.

Practical Completion is important because if it’s not achieved by the Due Completion Date, the Employer
can impose penalties on the Contractor.

The project Engineer must issue a Certificate of Practical Completion to the Contractor when he’s
achieved Practical Completion. Once the Certificate has been issued, the Employer may occupy and use
the Works, provided he gives reasonable access to the Contractor to finish the minor items still
outstanding and to fix any defects.

Although the Employer may occupy and use the Works, the Contractor still has possession of the Works.
This means the Contractor is still responsible for loss or damage to the Works, unless the loss or damage
is caused by the Employer.

How to obtain a Certificate of Practical Completion:

When the Contractor believes the Works are practically complete, he must contact the Engineer to
request the Certificate.

The Engineer must answer in 14 days and if he feels the Works aren’t yet practically complete, he must
give the Contractor a list of the work which must be done to make the Works complete.

Once the Contractor has properly completed the work on the Engineer’s list, the Engineer should issue
the Certificate of Practical Completion

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Contents

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1 What is practical completion

2 What happens at practical completion

3 What is needed for practical completion

4 When can practical completion be certified

5 Case law relating to practical completion

6 Related articles on Designing Buildings

What is practical completion

The RIBA Plan of Work 2020, defines practical completion as: 'The point in the process when the
construction work is certified as practically complete under the Building Contract. A Practical Completion
certificate may be used as a contractual document that allows the client to take possession of and to use
a building. It requires the Building Contract administrator to confirm that the building has been
completed in accordance with the Building Contract, including the issue of any information for Asset
Management or Facilities Management as well as the Building Manual and any Verified Construction
Information. It may also be necessary to consult with Project Stakeholders to confirm that the building
meets with the relevant standards and is suitable for occupation.'

Practical completion is referred to as 'substantial completion' on some forms of contract, particularly in

What happens at practical completion

The contract administrator certifies practical completion when all the works described in the contract
have been carried out. Certifying practical completion has the effect of:
Releasing half of the retention (an amount retained from payments due to the contractor to ensure they
complete the works).

Ending the contractor's liability for liquidated damages (damages that become payable to the client in
the event that there is a breach of contract by the contractor - generally by failing to complete the works
by the completion date).

Signifying the beginning of the defects liability period.

Once the certificate of practical completion has been issued, the client takes possession of the works for
occupation.

On construction management contracts, a separate certificate of practical completion must be issued for
each trade contract. Once all trade contracts (or all trade contracts for a particular section of the works)
have been issued, the construction manager issues a certificate or project completion (or sectional
completion). The same is true on management contracts, where each works contract must be certified
individually.

What is needed for practical completion

Documentation that should be issued to the client on certification of practical completion might include:

A draft building owner's manual.

A building user's guide.

The health and safety file.

The building log book.

A construction stage report.

When can practical completion be certified

There is no absolute definition of practical completion and case law is very complex. There is some
debate about when practical completion can be certified and whether it can be certified where there are
very minor (de minimis) items 'not affecting beneficial occupancy' that remain incomplete.

It is important to note however, that the defects liability period, which follows certification of practical
completion, is not a chance to correct problems apparent at practical completion, it is the period during
which the contractor may be recalled to rectify defects which appear following practical completion. If
there are defects apparent before practical completion, then these should be rectified before a
certificate of practical completion is issued.

This can put the contract administrator in a difficult position, as both the contractor and the client may
be keen to issue the certificate (so the building can be handed over), and yet defects (more than a de
minimis) are still apparent in the works. Issuing the certificate could render the contract administrator
liable for problems that this causes, for example in the calculation of liquidated damages, the position in
relation to performance bonds and the release of retention when it is not certain that the works will be
completed.

If the contract administrator is put under pressure to certify practical completion even though the works
are not complete, they might consider informing the client in writing of the potential problems of doing
so, obtaining written consent from the client to certify practical completion and obtaining agreement
from the contractor that they will complete the works and rectify any defects. If the contract
administrator is not confident about the potential problems, they may advise the client to seek legal
advice.

If practical completion is not certified by the most recently agreed completion date, then the contractor
may be liable to pay liquidated and ascertained damages to the client. These are pre-determined
damages set at the time that the contract is entered into, based on a calculation of the actual loss that
the client is likely to incur if the contractor fails to meet the completion date. Some contracts require
that a certificate of non-completion is issued as a pre-requisite to deducting liquidated and ascertained
damages.

NB: Sectional completion refers to a provision within construction contracts allowing different
completion dates for different sections of the works. This is common on large projects that are
completed in sections, allowing the client to take possession of the completed parts whilst construction
continues on others. Sectional completion differs from partial possession in that it is pre-planned and
defined in the contract documents.

Case law relating to practical completion

The case of Mears Limited v Costplan Services (South East) Limited, Plymouth (Notte Street) Limited, J.R.
Pickstock Limited [2019] EWCA Civ 502 has provided additional guidance about the meaning of practical
completion, based on the interpretation by the court that the contract as it stood would lead to a
“commercially absurd result” in which practical completion could not be certified.

LJ Coulson said it would be “commercially unworkable if every departure from the contract drawings,
regardless of the reason for, and the nature and extent of, the non-compliance, had to be regarded as a
breach of contract”.

He suggested that law on practical completion could be summarised as follows:

a) Practical completion is easier to recognise than define: see Keating on Construction Contracts, 10th
Edition, paragraph 20 – 169. There are no hard and fast rules: see Bailey paragraph 5.117, footnote 349.

b) The existence of latent defects cannot prevent practical completion (Jarvis). In many ways that is self-
evident: if the defect is latent, nobody knows about it and it cannot therefore prevent the certifier from
concluding that practical completion has been achieved.

c) In relation to patent defects, the cases show that there is no difference between an item of work that
has yet to be completed (i.e. an outstanding item) and an item of defective work which requires to be
remedied. Snagging lists can and will usually identify both types of item without distinction.

d) Although one interpretation of Viscount Dilhorne in Jarvis and Lord Diplock in Kaye suggests that the
very existence of patent defect prevents practical completion, that was emphatically not the view of
Salmon LJ in Jarvis, and the practical approach developed by Judge Newey in William Press and Emson
has been adopted in all the subsequent cases. As noted in Mariner, that can be summarised as a state of
affairs in which the works have been completed free from patent defects, other than ones to be ignored
as trifling.

e) Whether or not an item is trifling is a matter of fact and degree, to be measured against "the purpose
of allowing the employers to take possession of the works and to use them as intended" (see Salmon LJ
in Jarvis). However, this should not be elevated into the proposition that if, say, a house is capable of
being inhabited, or a hotel opened for business, the works must be regarded as practically complete,
regardless of the nature and extent of the items of work which remain to be completed/remedied.
Mariner is a good example of why such an approach is wrong. In consequence, I do not consider that
paragraph [187] of the judgment in Bovis Lend Lease, with its emphasis on the employer's ability to take
possession, should be regarded (without more) as an accurate statement of the law on practical
completion.

f) Other than Ruxley, there is no authority which addresses the interplay between the concept of
completion and the irremediable nature of any outstanding item of work. And even Ruxley is of limited
use because that issue did not go beyond the first instance decision. But on any view, Ruxley does not
support the proposition that the mere fact that the defect was irremediable meant that the works were
not practically complete.

Ref https://www.bailii.org/ew/cases/EWCA/Civ/2019/502.html

What is a practical completion certificate?

Practical completion certificates are commonly a requirement in Australian standard form contracts.
Such contracts often require the builder to issue a “certificate of practical completion”. This can be
helpful as:

it ensures the determination of practical completion is objective;

you can document any agreed (or non-agreed) minor defects or omission items to be rectified within an
arranged timeframe.

If you agree that the works have reached practical completion, you will sign the certificate and pay the
final progress claim in accordance with the contract.

However, you should not attend to payment until all construction/building works have been completed.