What is practical completion, and why does the date matter so much?
Practical completion (PC) is the point at which the works are complete except for minor defects and omissions and can be used for their intended purpose. For a subcontractor, three things hang off it: the release of the first half of your retention, the end of your liquidated damages exposure, and the start of the defects liability period. The traps are drafting that ties your PC to the head contract, and paperwork lists that let the certifier hold the date hostage.
Whose completion is it?
The most expensive words in the clause are "under the Head Contract". If your practical completion is defined by, or waits on, completion of the whole project, then your retention release, your LD cut-off and your defects period all wait on other trades and the builder's program. A trade that finished in month six can be carrying LD exposure and waiting on retention well into the next year.
The paperwork trap
Some contracts make PC conditional on every manual, warranty, certificate and as-built drawing being handed over first. The documents matter, but a long list with no deadline for the certifier to respond puts the date in the builder's hands.
Ask for a request-and-respond process: you notify when you believe PC is reached, the builder certifies or lists what is outstanding within a set number of days, and minor items are listed rather than used as a reason to refuse.
What to ask for
PC defined by reference to your subcontract works, not the project; a certification deadline; retention release and the start of the defects period tied to your PC; and liquidated damages that stop at your PC. Each is a small drafting change that moves money back to your side of the ledger.
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Scan my subcontract freeCommon questions
Is practical completion the same as handover?
Not necessarily. Handover is a practical event; PC is a contractual status defined by your contract, and it triggers money and time consequences. Check the definition clause rather than assuming.
Can the builder refuse practical completion over minor defects?
The usual definition allows for minor defects and omissions, so small items alone shouldn't hold it up, but your contract's definition governs. Drafting that requires every document and certificate first is where most refusals come from.
When does the defects liability period start?
Usually at practical completion, which is why the definition matters. If your defects period runs from head contract PC, it can start months after your trade finished.
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General information for Australian subcontractors, not legal advice. Statutory deadlines and details vary by state and change over time; verify them before relying on them. Written by Mat Kennedy at The Construction Contracts Co.