This report provides an in-depth analysis of the concept of "practical completion" in building contracts, specifically in relation to the AS2124, AS4000, and AS4300 contracts. It outlines the Contractor's obligations, the consequences of failing to meet the Date for Practical Completion, and the circumstances under which the Contractor may be entitled to an extension of time or additional payment.

Contractor's Obligation to Bring the Works to Practical Completion

The Contractor has a fundamental obligation to bring the Works to practical completion by the Date for Practical Completion, as specified in the Contract. Practical completion is defined in the AS2124 contract as "the stage when the Works are complete except for any minor omissions or defects which do not prevent the Works from being reasonably capable of being used for their intended purpose" (AS2124, Clause 2.1).

Similarly, the AS4000 contract defines practical completion as "the stage when the Works are complete, except for any minor omissions or defects that do not prevent the Works from being reasonably capable of being used for their intended purpose" (AS4000, Clause 2.1).

The AS4300 contract also defines practical completion as "the stage when the Works are complete, except for any minor omissions or defects that do not prevent the Works from being reasonably capable of being used for their intended purpose" (AS4300, Clause 2.1).

The Contractor must ensure that all work is completed, and the site is cleared of all rubbish and surplus materials, to achieve practical completion. The Contractor is also responsible for obtaining all necessary certifications and approvals from relevant authorities.

Consequences of Failing to Meet the Date for Practical Completion

If the Contractor fails to meet the Date for Practical Completion, the Principal may be entitled to claim liquidated damages. Liquidated damages are a predetermined amount of damages specified in the Contract, calculated on a daily or weekly basis, for each day or week that the Contractor fails to meet the Date for Practical Completion (AS2124, Clause 35.1; AS4000, Clause 34.1; AS4300, Clause 35.1).

The Principal must provide written notice to the Contractor of their intention to claim liquidated damages, specifying the amount and the period for which the damages are claimed. The Contractor may dispute the claim, but the onus is on the Contractor to prove that the delay was not their responsibility.

Circumstances Under Which the Contractor May Be Entitled to an Extension of Time

The Contractor may be entitled to an extension of time in the following circumstances:

a. Principal-Caused Delays

If the Principal causes delays, such as failing to provide access to the site, detailed drawings, or specifications, the Contractor may be entitled to an extension of time. The Contractor must provide written notice to the Principal, specifying the cause and extent of the delay, and the Principal must grant an extension of time if the delay is reasonable (AS2124, Clause 35.5; AS4000, Clause 34.5; AS4300, Clause 35.5).

b. Contractor-Caused Delays

If the Contractor causes delays, such as late arrival on site, slow work rate, or defective work, the Contractor is not entitled to an extension of time. However, if the delay is caused by a subcontractor or supplier, the Contractor may be able to claim an extension of time if they can prove that they took reasonable steps to prevent the delay.

c. External Factors

If external factors, such as inclement weather, industrial stoppages, or Acts of God, cause delays, the Contractor may be entitled to an extension of time. The Contractor must provide written notice to the Principal, specifying the cause and extent of the delay, and the Principal must grant an extension of time if the delay is reasonable (AS2124, Clause 35.5; AS4000, Clause 34.5; AS4300, Clause 35.5).

Importance of Express Provisions in the Contract for Extensions of Time and Delay Costs

It is essential to include express provisions in the Contract for extensions of time and delay costs to avoid disputes and ensure that the Contractor is fairly compensated for delays beyond their control. The Contract should specify the procedures for claiming extensions of time, the criteria for assessing delay costs, and the mechanism for resolving disputes.

In the AS2124 contract, Clause 35.5 requires the Principal to grant an extension of time if the delay is reasonable, and Clause 36.1 provides for the payment of delay costs if the Contractor is entitled to an extension of time.

Similarly, the AS4000 contract requires the Principal to grant an extension of time if the delay is reasonable (Clause 34.5), and provides for the payment of delay costs if the Contractor is entitled to an extension of time (Clause 35.1).

The AS4300 contract also requires the Principal to grant an extension of time if the delay is reasonable (Clause 35.5), and provides for the payment of delay costs if the Contractor is entitled to an extension of time (Clause 36.1).

References

AS2124-1992, General Conditions of Contract for Building and Civil Engineering Works

AS4000-1997, General Conditions of Contract for Building and Civil Engineering Works

AS4300-1995, General Conditions of Contract for Design and Construct Building and Civil

Note on other types of contracts (not explored in this report):

ABIC (Australian Building Industry Contracts)

NEC 4 (New Engineering Contract)

The concept of practical completion is a critical aspect of building contracts, and the Contractor has a fundamental obligation to bring the Works to practical completion by the Date for Practical Completion. The consequences of failing to meet the Date for Practical Completion can be severe, including claims for liquidated damages. However, the Contractor may be entitled to an extension of time or additional payment in certain circumstances, including Principal-caused delays, external factors, and express provisions in the Contract.

It is essential for Contractors and Principals to understand their obligations and entitlements under the Contract to avoid disputes and ensure that the project is completed on time and within budget.

Successful management of practical completion requires:

• Clear understanding of contractual obligations
• Strong documentation systems
• Timely notification of delays
• Effective claims management
• Proactive risk management

Contractors should focus on maintaining comprehensive records and following contractual procedures precisely while maintaining professional relationships with Principals.

Note: This guide provides general information only and should not be understood as legal advice of any kind. Specific contract terms should be reviewed for each project, and legal advice sought where necessary.

Practical Completion Requirements

Practical completion occurs when:

• Works are substantially complete and fit for intended purpose
• Only minor defects remain that don't prevent use
• Required documentation and certificates are provided
• Site is cleared and temporary works removed

Key obligations under the standard contracts include:

• Achieving completion by the specified date
• Meeting all contract specifications
• Obtaining necessary certifications
• Providing complete documentation
• Ensuring works are safe and compliant

Consequences of Delay

Liquidated Damages

• Principal may claim predetermined damages for each day of delay
• Calculated from Date for Practical Completion until actual completion
• Deductible from progress payments
• Must represent genuine pre-estimate of loss

Additional Consequences

• Extended site costs and overheads
• Continued insurance obligations
• Potential reputational damage
• Risk of contract termination
• Loss of early completion bonuses (if applicable)

Extensions of Time (EOT)

Principal-Caused Delays

Qualifying events include:

• Delayed site access
• Late provision of information or drawings
• Variations ordered by Principal
• Interference by other contractors

External Factors

May warrant EOT:

• Exceptional weather conditions
• Industry-wide industrial action
• Force majeure events
• Legislative changes
• Unforeseen site conditions

Contractor-Caused Delays

Generally not grounds for EOT:

• Poor work planning
• Inadequate resourcing
• Defective work
• Subcontractor delays within contractor's control

Making EOT Claims

Requirements:

• Written notice within specified timeframes
• Detailed documentation of cause and impact
• Evidence of critical path effect
• Demonstration of mitigation efforts
• Updated construction program

Contract Provisions for Delays and Costs

Essential Elements

• Contracts should clearly specify:
• Qualifying events for EOT
• Claim procedures and timeframes
• Documentation requirements
• Basis for delay cost calculations
• Dispute resolution processes

Best Practices for Management

Documentation:

• Maintain detailed daily records
• Document all delays immediately
• Preserve relevant correspondence
• Take dated photographs
• Update programs regularly
• Contract Administration:
• Know your contractual obligations
• Follow notification requirements strictly
• Submit claims within time limits
• Maintain open communication

Recommendations

For Contractors:

• Implement robust documentation systems
• Train staff in contract administration
• Monitor progress against program regularly
• Communicate delays promptly
• Maintain detailed records
• Seek expert advice when needed