So What Constitutes ‘Practical Completion’?
The answer really depends upon the form of contract under which the works are being delivered. However, the general understanding across the industry is that Practical Completion (or ‘PC’ as it is also known) marks the end of the Substantive Works and the commencement of the defects liability period.
Whilst the term is recognised by most construction industry professionals, few truly understand the meaning that sits behind it.
Certain contracts including the NEC provide clarity as to when ‘Completion’ is deemed to have occurred and is prescriptive in terms of the ‘Take Over’ process.
Not all contracts however, make sufficient provision and that is when problems can arise…
The recent case of the University of Warwick v Balfour Beatty Group  EWHC 3230 (TCC) gives a guide as to how the court can consider issues which may arise.
The contract between the parties was an amended form of the JCT 2011 Design and Build (the “Contract”) for design and construction works of the National Automotive Innovation Centre within the UOW’s campus (the Claimant).
The contract made provision for Practical Completion which was defined as “[…] a state of completeness […] which allows the Property to be occupied or used […]”. Further provision was made for “Property” which was defined as “the property comprised of the completed Works”.
So What Could Possibly Go Wrong?
The Works comprised of four sections, all of which had a possession date of the 20th April 2015 and the Date for Completion was 10th April 2017 for sections 1 to 3 and 5th July 2017 for section 4.
It was the position of the Defendant that due to the definition contained within the contract “[…] a state of completeness […] which allows the Property to be occupied or used […]”, Practical Completion could not occur until all sections had been completed, as it was at that point the Property could be occupied. The Defendant therefore argued it was not possible to achieve Practical Completion of the sections prior to Practical Completion of the whole of the works.
The Court disagreed. Mckenna J. held that it was necessary to apply common sense to the Contract and as such, the Practical Completion requirements related to the specific section under construction and did not relate to the whole of the Works.
In addition, the Court further set out the Contract made specific provision for the requirements of sectional completion throughout and as such, it was necessary to apply business common sense.
So What Lesson Should We take?
We take two key lessons from this particular case, the first is in respect of drafting clauses which relate to Practical Completion.
It is key to ensure there is no ambiguity as to the completion of the works and ensure no elements of the wording are ‘open to interpretation’, especially where the Works are to be delivered in sections.
The second lesson is to make sure Practical Completion is defined within the Contract to ensure there is no question by the parties as to when this has been achieved.
For further support or guidance in relation to Practical Completion, Delays or any other Construction Contract issue or dispute, please contact our team of experts on [email protected] or 0115 9336131.
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