Guide letter 33: Advice to client - works nearing practical completion

1. When and how?

1.1 You should write this letter in advance of completion of the building works and remind the client of their rights and responsibilities at the time of practical completion. Give the client plenty of notice.

1.2 As some of the contractor's liabilities and insurance obligations cease from the date of practical completion, the owner under the contract must insure the premises. You should be sure to limit insurance advice to fact only and if detailed advice is required recommend that your client contacts their insurance adviser.

1.3 You should send this letter before receipt of the contractor's initial advice that the works are near practical completion.

2. Content

Confirm:

• how the date of practical completion is assessed;
• that some of the contractor’s insurances cease at practical completion;
• procedures for claiming and obtaining the notice of practical completion and that where no notice of practical completion is actually issued, it may be deemed to occur because of certain defaults or by certain actions, eg the client's occupation;
• under some contracts the architect may issue a notice of practical completion without application from the contractor;
• that the date of practical completion shall become the date for commencement of the defects liability period;
• that any claim for liquidated and ascertained damages must be made in accordance with the time frame stipulated in the contract (note: the date of practical completion is the date when liquidated damages cease); and
• that the issue of the notice of practical completion will also trigger the release of half of the retention moneys or bank guarantees as applicable.

Advise:

• the date for practical completion (as currently amended) in accordance with the contract;
• generally which works are yet to be completed or any conditions of contract which must be met prior to practical completion;
• all documents including Certificate of Occupation as required under the contract have been received and are satisfactory – make reference to the relevant specification clauses and times when certificates are required;
• any action which you have taken to date and the action which you propose to take;
• any variations which you believe still require authorisation and when you need a response in order to instruct the contractor in time (generally no new work can be instructed under the contract after practical completion);
• that works may remain incomplete and defects for rectification before Final Certificate may still be present when practical completion is certified (refer to definitions in relevant contracts); 
• the anticipated date when you expect the works to be practically complete and if any, to what extent liquidated damages may apply;
• your assessment of moneys to be released or adjustments to be made to security; and
• regarding adjustment of security at practical completion
• when defects liability period will commence and terminate and the implications.

Recommend:

• that the client discusses insurance cover with their insurance adviser.

3. Action

3.1 Writing this letter is highly desirable to ensure the client understands their rights and responsibilities at the time of practical completion.

4. What happens next?

4.1 Carry out any instructions agreed with the client in a timely manner to ensure there is no delay in practical completion.

5. Are there other possibilities?

5.1 The client occupies the project before practical completion has been certified by you.

5.2 If a staged practical completion is to be implemented, this should be reviewed in detail and potentially suggest a workshop with the parties to determine actions and responsibilities.

6. What can happen if you don't?

6.1 It is essential that the client fully understands the ramifications of practical completion. Failure by you to implement the client's objectives within the contract may cause the client to suffer loss.

7. Copies

7.1 Architect's file