Ensuring Smooth Certification: A Consultant's Guide to Practical Completion and Non-Completion.
With the commercial and legal significance of practical completion in mind, it becomes crucial to understand its implications, and more importantly, the best practices to ensure a smooth transition. In the same vein, it’s also good to understand the implications of non-completion and the issuance of a non-completion certificate.
Effects of Practical Completion
The certification of practical completion has several key effects:
It puts an end to the Contractors Liability for Liquidated Ascertained Damages (LADs) (damages that become payable to the client in the event that there is a breach of contract by the contractor - generally by failing to complete the works by the completion date).
It starts the rectification period.
The employer takes possession of the site and a transfer of insurances occurs.
Normally half the retention is released (an amount retained from payments due to the contractor to ensure they complete the works).
Implications of Non-Completion
In cases where practical completion is not achieved by the agreed completion date, a certificate of non-completion should be issued. This certificate gives formal written notice to the contractor of their failure to complete the works as per the contract.
This is a crucial step as it serves as a prerequisite for the employer's ability to deduct LADs. Missing this can have unfavourable consequences.
Guidelines for Smooth Transition
Here are some best practices for consultants to facilitate smooth transitions to practical completion and avoid potential pitfalls:
1. Key timings: Ensure all PC dates (update accordingly from EoT’s) are marked in your calendar and someone else in the organisation, something needs to happen on the completion date either a Practical Completion or Non-Completion certificate, this will help mitigate the risk of missing the date due to someone leaving, being away etc.
2. Ensure all documentation is ready to be issued to the client: Ensure there has been proactive management of ensuring all documentation is ready to be provided to the client:
• O&M manual.
• Construction stage report.
• Building Control certificate.
• Health and Safety file.
Having a Common Data Environment (CDE) can help be an easy way to compile, transport and self-serve the information from multiple parties, using dropbox, Gdrive, ESTA, etc. can provide this.
3. Issue Certifications Carefully: Be cautious about certifying practical completion of the works before they are indeed finished. We can all feel pressure to issue PC but it is essential to explain to clients the potential problems for doing so. Leaning on the rectification period and snag lists can be appealing but has significant risks.
We can help give visibility when completion dates are due across all your projects, what’s been certified, alerts to warn you if a certificate needs to be issued & provide CDE’s to help make the process a little more joined up and easier.