Time in construction contracts

Completion

Completion of construction works usually involves final adjustments and rectification of defects which may make it difficult to determine the exact time when the works are complete.

To manage this situation, the concept of practical completion was developed, which reflects the reality that completion is generally not defect-free and occupation can take place while minor matters are attended to.

The contract definition of practical completion may be quite simply and generally described. Alternatively, it may involve the listing of a number of prescriptive requirements to identify exactly the status of the work that is required before it is considered to be practically complete.

Date for practical completion and date of practical completion

The date when practical completion is required to occur is the date for practical completion, while the date when practical completion in fact occurs, is the date of practical completion.

The date for practical completion is:

• a date which can be adjusted, usually by an extension of time regime; and
• the date which the contractor is contractually obliged to achieve.

Practical completion, and hence the date of practical completion, occurs when the contractual requirements for practical completion have been met.

Progress of the works

A contractor is generally required to achieve practical completion by the date for practical completion and to proceed with the works with due diligence. Various Australian standard form contracts reflect these obligations.

For example:

• AS4000 and AS4902 require the contractor to provide a ‘construction program’, from which it may not depart without reasonable cause. Where there is no construction program, the contractor is to proceed with the works with ‘due expedition and without delay’.
• Clause 39.2(d) of AS4902 allows the principal, in circumstances where there is no construction program, to serve a notice to show cause if the contractor fails to proceed with due expedition and without delay.