Substantial completion
| Substantial completion |
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Substantial completion is a point in the course of a project when the project or part of it is sufficiently complete according to the contract documents, the Owner may occupy the project or part thereof for its intended use, and all systems and equipment are ready to receive raw material for the start-up operation and are capable of production[1].
A substantial completion is something that is missing until completion or final completion; rather, it is a practical completion. Although the owner may not occupy the building until the construction department says it can, a certificate of completion means that the project is ready for its intended use[2].
Process
The AIA documents define substantial completion as occurring when the construction is sufficiently complete according to the contract documents for the owner to occupy or use the work or its intended part for its intended use. On the basis of the AIA documents, the architect shall determine the date of significant completion by issuing a certificate of substantial completion. At the time of substantial completion, the contractor, the owner and/or the architect conducts a check to establish a list of elements, the punch list, to be completed or corrected before final completion. After completing the punch list, the contractor shall request a final inspection. The owner shall carry out a final check to determine whether the contractor has carried out all the work on the charts in accordance with the owner's requirements[3].
Legal considerations
Substantial completion has been defined in a number of ways and has been the subject of extensive litigation. In general, when the owner uses and benefits from the contractor's work and the project can be used for its intended purpose, there has been a substantial completion[4].
In fact, substantial completion is not significantly different from essentially complete, but the term ‘substantial completion’ is the legally preferred term in the world of construction. Substantial completion seems to be sufficiently objective: but, like practical completion, it is not so easy to identify. Many lawyers believe that no milestone in a construction project is more significant than that associated with a substantial completion. It follows from already established legal precedents that such a formulation in the contract has a huge impact on the rights and remedies of the Owner against the contractor[5].
A substantial completion may be synonymous to a practical completion. All this depends on the definitions contained in the contract. The point is that there are many definitions of completion. The parties have to agree in advance which definition they want to apply. Typically, the term 'practical completion' is more commonly used for situations where the first processing takes place, but not all systems are yet operational; for example, where only one process line is completed at a multi-line plant. The term ‘substantially complete’ is more reserved for the whole project, i.e. when all systems reach their practical end. But strictly speaking, it does not have to be so, substantial completion can be (and often is) applied to a single system[6].
Footnotes
References
- Dykstra A, (2018), Construction Project Management: A Complete Introduction, Kirshner Publishing Company, Santa Rosa
- Hickson R, Owen T, (2015), Project Management for mining- Handbook for Delivering Project Success, Bukupedia, United States of America
- Kelleher T, Jr., Smith, Currie & Hancock LLP, (2005), Smith, Currie & Hancock's Common Sense Construction Law: A Practical Guide, John Wiley & Sons, New Jersey
- Klinger M, Susong M, (2006), The Construction Project: Phases, People, Terms, Paperwork, Processes, American Bar Association, Chicago
Author: Karolina Stankiewicz
