Practical completion: what to check before you sign

What practical completion actually means

Practical completion is the point at which the works are complete except for minor items that do not prevent the client from taking possession and using the building for its intended purpose. In the United States the equivalent concept is substantial completion, and it functions the same way.

Most standard form contracts do not define it any more tightly than that. That vagueness is deliberate, because it has to cover a warehouse and a hospital, but it is also why so many arguments end up here. The working test used in practice is straightforward: can the client move in and do what the building is for, safely and lawfully, without the contractor’s continued presence being necessary.

A building with a snagging list of two hundred cosmetic items can be practically complete. A building with one outstanding item, a fire alarm that has not been commissioned, is not, because it cannot lawfully be occupied. Volume of items is not the test. Whether the outstanding work prevents use is the test.

What changes the moment it is certified

People treat the certificate as an administrative formality. It is not. Five things move at once, and they move in the contractor’s favour.

That last one is subtle and it costs clients real money. Before practical completion, incomplete work is the contractor’s obligation to finish. After it, outstanding items become defects to be rectified during a defined period, on the contractor’s programme rather than yours, with far less leverage behind them. Certifying early to keep a programme looking healthy converts your strongest position into your weakest.

What must be true before you certify

Run this before the walk. If any of it is missing, the walk is premature and you should say so in writing rather than inspecting around it.

The pre-completion walk

Walk it with the contractor rather than alone. A joint walk halves the number of items that get disputed later, because the site manager either accepts an item on the spot or explains why it is out of scope while you are both standing in front of it.

Split what you find into two registers as you go, and be explicit about which is which:

• Blocking items. Anything preventing safe, lawful, intended use. These stop practical completion. There should be very few, and each one needs a reason you can state in a sentence.
• Defects and outstanding items. Everything else. These go on the list annexed to the certificate and get worked down during the liability period.

The element by element method for the walk itself is the same one used for a domestic snagging inspection, and the room by room snagging checklist covers it in detail. The difference at practical completion is that services commissioning and statutory certification carry far more weight than finishes.

Photograph everything, including the things that are correct. A photographic record of the building’s condition on the day possession transferred is the only defence against being asked, four months later, to rectify damage caused by the client’s own fit out contractor. This is the single highest value hour of the whole process, and it is the one people skip.

Site Audit exists largely for this walk: every item gets its own photographs and captions, a location, a trade and a priority, and the whole register comes out as a dated PDF that can be annexed to the certificate the same afternoon.

Documents to demand before you sign

The handover pack is routinely promised at practical completion and delivered months later, by which time the people who assembled it have left. Withholding the certificate is the only leverage you will ever have over it.

• Operation and maintenance manuals for every installed system, with manufacturer details and model numbers
• As built drawings reflecting what was actually installed, not the tender set
• All commissioning records and test certificates, including electrical, gas, water, drainage, fire and lift
• The health and safety file, and where applicable the fire safety information required at handover
• Warranties and guarantees for roofing, glazing, flooring, appliances and any specialist installation, made out to the correct entity
• Statutory approvals: building control completion or the relevant occupation certificate
• Keys, access cards, alarm and gate codes, with a signed schedule of how many of each were handed over

Where it goes wrong

Certifying under programme pressure. The most common failure by a long way. Once signed it cannot be unsigned, and the leverage you gave up does not come back.

Beneficial occupation by accident. If the client starts using part of the building, storing goods in it or running their own trades through it, a contractor will argue practical completion has happened in substance whatever the paperwork says. Decide deliberately whether to use sectional completion, and document it.

An unagreed list. A defect list issued after the certificate, rather than annexed to it, invites the response that the items are damage rather than defects. Annex the list, date it, and have both parties sign the annexure.

Assuming the list is the limit of liability. It is not. Latent defects that could not reasonably have been seen on the day remain the contractor’s responsibility, and statutory warranties run far longer than the contractual period. That is covered in the guide to the defects liability period.