Read time: 2 minutes
Practical completion typically refers to the stage of a construction contract when the works are determined to be fit for use and/or occupation in accordance with the relevant contract.
In this phase you will assess and determine practical completion and issue the notice of practical completion. There are a number of contractual obligations that need to be completed by the architect, client and contractor at this time, including partial release of the security in accordance with the contract. Refer Acumen note Security – bank guarantees and cash retention.
The majority of standard-form building contracts used in Australia relate the beginning of the construction phase of a project to the date upon which the contractor obtains possession of the site.
Completion however, is a two-stage process:
- Practical completion or substantial completion being the date when the works are finished.
- The issue of the final certificate being the last task for the architect to formally complete the contract. Refer Acumen note Final completion and certificate.
ABIC contracts state that works are at practical completion when, in the reasonable opinion of the architect:
- they are substantially complete and any incomplete work or defects remaining in the works are of a minor nature and number, the completion or rectification of which is not practicable at that time and will not unreasonably affect occupation and use
- all commissioning tests in relation to the plant and equipment shown in…Schedule 1 have been carried out successfully, and
- any approvals required for occupation have been obtained from the relevant authorities and copies of official documents evidencing the approvals have been provided to the architect.
Completion and occupation
ABIC contracts, and most other current standard-form building contracts, assume that the contractor, upon taking possession of the site, will proceed with the required skill in labour and material management to complete the works to a stage where they can be handed over to the owner. This stage of the works is defined as 'practical completion'.
Definitions of the term 'practical completion' vary in the different forms of contract, but in all cases the intention behind each definition is that at the time of practical completion the building will be weather- and water-tight with all services operating and all finishes, fixtures and fittings completed. Most contracts require approval (of completion) from all relevant authorities, including certificates of compliance from relevant subcontractors for particular sections of the works. Final approvals from all authorities may not be achievable by the date the architect determines practical completion has been achieved and in many cases the owner will want to take possession of the works, notwithstanding the fact that all approvals may not be in place.
In most contracts, the act of taking possession of the works by the owner provides an automatic contractual response that the works have reached the stage of practical completion whether the building is finished or not.
Disclaimer
This content is provided by the Australian Institute of Architects for reference purposes and as general guidance. It does not take into account specific circumstances and should not be relied on in that way. It is not legal, financial, insurance, or other advice and you should seek independent verification or advice before relying on this content in circumstances where loss or damage may result. The Institute endeavours to publish content that is accurate at the time it is published, but does not accept responsibility for content that may or has become inaccurate over time. Using this website and content is subject to the Acumen User Licence.