Practical completion

Practical completion is the point, certified in writing, at which construction works are substantially complete and the client can take possession, even though minor defects may remain outstanding. The term is used across the JCT suite and most other UK standard forms; NEC uses Completion, defined by reference to the works information rather than by a certifier's judgement. Practical completion is worth knowing precisely because it is the date several other contract clocks start and stop from.

What practical completion triggers

Certifying it sets off a group of consequences on the same date.

• Retention. The first stage of retention is released. Under JCT the retention is released in two parts, the first at practical completion and the balance once making good is certified; the percentage and the split are stated in the contract particulars, so read them rather than assuming a standard figure.
• The defects liability period starts. JCT calls it the rectification period. The contractor keeps the right, and the obligation, to return and remedy defects notified during it.
• Liquidated damages stop accruing. Any pre-agreed rate for late completion runs up to the date of practical completion and no further, which is why a disputed certificate is expensive for the contractor while it stays disputed.
• Insurance and possession transfer. Responsibility for the works normally passes from the contractor to the employer on the same date, along with the risk of damage to them.
• The final account process opens. Variations, loss and expense and re-measured quantities can be brought to a conclusion.

Practical completion, sectional completion and final completion

On a phased project, sectional completion certifies parts of the works separately, each with its own date, its own retention release and its own damages rate. Where a client takes early possession of part of the works without a sectional completion mechanism in the contract, that is partial possession, and it produces a similar effect by a different route.

Final completion is the far end of the defects liability period. Once the contract administrator confirms that notified defects have been made good, the remaining retention is released and the final account closes. The two dates can be a year or more apart on commercial work, and the second one is the one businesses lose, because nothing on site marks it.

The practical control is recording both dates when the contract is signed rather than when the job finishes, and setting the reminder for the final retention invoice against the second one. Holding the certificate date, the rectification period end and the retention balance on the job record alongside the invoices raised against it is what keeps the last payment from being written off by default.