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ConstructionPro Week, Volume: 3 - Issue: 48 - 11/26/2014

Why Is the Substantial Completion Date Important?

By Bruce Jervis

 

We have previously discussed the importance of the substantial completion milestone. It is probably the most significant milestone in a construction project, arguably more important than final completion and acceptance. A recent Nebraska case reiterated the importance of this milestone.

 

The construction contract called for the project owner’s consulting engineer to certify substantial completion. But, the contractor never requested certification, and the engineer never issued it. The date of substantial completion became crucial because it determined whether the owner could assert a timely claim against the contractor for allegedly noncompliant work.

 

The owner argued that the date of substantial completion had been delayed, or extended, by punch list item work and warranty work the contractor had performed after the constructed facility had been placed in use. The owner lost this argument. Substantial completion was achieved when the work was fit for its intended use and purpose.

 

The real question here is why the parties did not document substantial completion at the time it was achieved. With so many significant matters affected – claim limitation periods, reduction of retainage, use and access, insurance responsibilities – why turn the date of substantial completion into a jury question?

 

What has been your experience? Do parties adhere to contractual procedures for formal certification of substantial completion? Or, is it frequently overlooked? I welcome your comments.

 

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