1.

0 PRACTICAL COMPLETION

Most building contracts provide that the contractor must achieve practical completion. There
are many legal opinions on this matter but the most expedient view is that the work is
completed except for trifling defects. For example, a state which any work outstanding is so
minimal that it will not affect the employer’s use and enjoyment of the building. The
execution of the outstanding works or making good defects will not cause undue
inconvenience to the users.

Criteria for practical completion practical completion in PWD 203A:

Clause 39.5

a. The works have been completed in accordance with the terms and conditions of this
contract;
b. The government can have full, proper and beneficial use of the works for their
intended purpose, notwithstanding that there may be works of a very minor defects
provided that such works do not prevent or diminish the full, proper and beneficial
use as aforesaid;
c. The works have passed any commissioning tests required in the contract document;
d. The work shall be made available to the government in a condition fit for occupation;
e. All the essential services, including access roads, landscape, car park, drains,
sanitary, water and electricity installation, fire hydrant, sewerage and refuse disposal
equipment and fire lifts specified in this contract.

However, P.A.M 2006 says the Architect must be satisfied that:

Clause 15.2(a)

 The works are carried out according to the contract and.

 The outstanding defects are so minimal

In practice, the following questions are normally used as a guide in determining practical
completion.

a) Are the works executed according to the contract?

b) Have the completed works reached the stage that they will perform the
functions for which they are constructed or may be occupied or used?
c) Are the outstanding and defective works substantial or ‘de minimis’?
d) Will the execution of the outstanding works or making good of defects cause
undue inconvenience to the occupants or users?

The S.O must be completely satisfied with the answers to the above.The works must fulfill all
the criteria for practical completion before the issuance of the Certificate of Practical
Completion.
CERTIFICATE OF PRACTICAL COMPLETION

If the S.O satisfies that the works have been completed. The Certificate of Practical
Completion (C.P.C) is issued to the contractor. Date of practical completion is as date of
C.P.C. Then, list of outstanding and defective works which are ‘de minimise’ to be forwarded
to the contractor for his action – remedial works to be done within a reasonable time. If the
works do not meet the criteria for practical completion – they are considered not complete.
Hence, list of outstanding and defective works to be forwarded to the contractor for his
action. The contractor has to carry out the listed work until he achieves practical completion.
All the works not listed are considered complete. Certificate of Non-Completion (C.N.C) is
issued to the contractor if the works are not completed on time – L.A.D will be imposed on
the contractor during the period of delay.

EFFECTS OF THE ISSUES OF C.P.C

Practical completion is important to ensure its own right. For example, it marks the
completion of the works. Secondly, for its contractual effects. For example, upon the
issuance of C.P.C., the following take place automatically. The contractor is no longer
obliged to accept instruction regarding fresh works since the works are now complete. It is
even on modified terms.

CONTARTCTOR’S OBLIGATION AFTER COMPLETION

If the contractor refuses to do the work, the employer can employ others to do it and recover
the expense from the contractor. The S.O. will issue ‘Certificate of Making Good Defects’
when the contractor has made good all the defects.
2.0 DAMAGES FOR NON-COMPLETION

Non completion is the situation where the works do not reach practical completion within the
contractual completion date. The work are not completed by the completion date. it is called
non-completion and this leads to the delay in completion of the work.

Basically, there are three types of delay:

a. Extension of time – if the delay is not due to the contractors faults.

b. Liquidated and ascertained damages – if delay is caused by contractor.
c. Determination – if delay is serious and caused by contractor.

CERTIFICATE OF NON-COMPLETION

The S.O. is to issue a Certificate of Non-Completion to certify that the contractor has failed to
complete the job on time. If there is no exact date of issuance. So, normally issued on the
completion date. The Certificate of Non-Completion is a condition precedent to deduction for
L.A.D.

EFFECT OF THE ISSUANCE OF CERTIFICATE OF NON-COMPLETION

The employer is entitled to be compensate for all losses suffered by him for the delay
beyond the contractual completion date. The amount of L.A.D. to be paid to the employer is
calculated based on the rate stated in the Appendix.

DAMAGES FOR NON-COMPLETION - Liquidated and Ascertained Damages (LAD)

There are three types of LAD:

a. A fixed amount
b. An agreed amount
c. A pre determined amount

COST FOR LAD THAT’S NEED TO BE PAID BY CONTRACTOR.

a. Based on the loss of income by the employer

This method is normally applicable to small projects that provide revenue to the
employer. The damages may be taken as equal to the estimate amount of rental of
the building.

b. Based on all factors that contribute to the total loss incurred by the employer.

This is normally applicable to bigger projects that provide revenue to the employer.
This method is more comprehensive and include such factors as Financing charges,
Loss of income and Prolongation Cost.

c. Based on the cost of providing finance for the contract works.

For example, the interest on the loan to be paid by the employer. This method is
normally applicable to non-making profit concern. For projects that do not provide
revenue to the employer such as schools, mosques, clinics, etc. It is difficult to
determine what real damage is – that’s good reason for liquidating the damages.
The percentage of L.A.D. is equal to Prime Rate/365 days. This prime rate may be
obtained form any commercial bank in the area where the project is situated.