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Practical completion of HIA contracts
Practical completion is an important milestone. It determines who is responsible for insuring the works, when you get final payment, when the defects period starts and whether you are liable to pay liquidated (delay) damages.
Thursday, 15th April 2021
Definition of practical completion
‘Practical completion’ means when the building works are complete except for minor omissions and defects that do not prevent the building works from being reasonably capable of being used for their usual purpose. If you are not sure whether any omissions and defects are ‘minor’ or may prevent the works from being used for their usual purpose you should contact your HIA workplace adviser for guidance.
What happens when you reach practical completion?
At least five days before you actually reach practical completion you must give your client a notice of practical completion. The notice must:
- state what you believe will be the date of practical completion
- state a date and time to meet your client on site to inspect the building works
- have attached to it your final progress claim.
When you meet your client on site to inspect the works, your client must either:
- pay the final progress claim, or
- give you written notice stating what he/she believes needs to be completed or rectified before practical completion is reached.
If your client pays the final progress claim, the date of practical completion is that stated in your notice of practical completion.
If your client gives you a list of things to be done for the works to reach practical completion you can either:
- do those things that your client wants done and then give your client another notice of practical completion
OR
- give your client a written notice rejecting your client’s claims and referring the matter to dispute resolution.
What if your client does not pay the final progress claim or give you a notice?
If this happens:
- the amount of your final progress claim is treated as a debt owning to you
- the date of practical completion is the date stated in your notice of practical completion
- the owner is deemed to acknowledge that practical completion has been reached.
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