Click here to call us +61 2 9929 0226
Posted 06 August 2014
t was the golfer Bobby Locke who coined the phrase “You drive for show, but putt for dough.” Like professional golfers, successful builders know how to finish. However, to reap the benefits of finishing it is important to get the contract admin right.
It is not just a question of securing the final payment and retention releases that are usually triggered by completion (or practical completion). There are four other legal consequences that provide builders with important risk management payoffs:
The profit on many a project has been lost, for the want of a builder appreciating the significance of completion to one or other of these risks. Part of the reason for this is problems with the word “completion” in construction contracts.
In construction contracts “completion” very rarely means completion. Almost inevitably, there will be minor works and defects the builder has to attend to even once occupation has been made available to the owners. Completion of the works is quite different from completion of the contract. Hence many contracts use the term “practical completion”. On larger commercial projects nothing is left to chance, the contract will provide a regimen for a Practical Completion Certificate formally recording the date. However, on smaller projects, where delay damages may not be a major concern, projects can drift into an ill-defined completion, particularly where the owner takes early, late, or partial occupation. Often building defect claims are not made until years after the project is finished, and builders have to spend a fortune in legal fees and building disputes that could have been avoided had they ensured there was some objective record of when they actually completed the works.
At completion, builders need to know what the relevant contract provides with respect to the following matters, and act accordingly.
If the contract is not clear about these issues, or there are special circumstances, builders should consider getting some short legal advice.
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.