Practical completion, and what it actually triggers
Not when the building is perfect. When it’s usable, with a list attached.
The short answer
The most misunderstood date in a construction contract, and the one most practice owners plan their opening around. Those two facts don’t sit comfortably together.
Key points
- Practical completion means usable, not flawless.
- It starts the defects liability period and usually releases part of the retention.
- It’s not the same as an occupancy permit. You can have one without the other.
- Minor defects go on a list. They do not prevent practical completion.
- Book your opening around the permit, not around this date.
The most misunderstood date in a construction contract, and the one most practice owners plan their opening around. Those two facts don’t sit comfortably together.
What practical completion means
Practical completion is the point at which the works are complete except for minor defects and omissions that do not prevent the building being used for its intended purpose.
Read that again, because the operative word is used. Not finished. Not perfect. Not free of snags. Usable.
A scuffed skirting, a door that needs adjusting, a missing cover plate: these go on a defects list and are rectified afterwards. They don’t stop practical completion, and a client withholding it over them is usually in the wrong under their own contract.
What it triggers
More than people expect, which is why the date matters:
- Possession passes to you. The site becomes your premises.
- The defects liability period starts. Usually twelve months.
- Part of the retention or security is released, with the balance held until the end of the defects period.
- Insurance responsibility shifts from the builder to you. Worth confirming your policy is in place on the day, not the week after.
- Liquidated damages stop running, where the contract provides for them.
- The defects list is issued, and the clock starts on rectifying it.
Practical completion is not permission to open
This is the distinction that costs practices money.
Practical completion is contractual, between you and your builder. An occupancy permit or occupation certificate is statutory, issued by the building surveyor or certifier.
You can reach practical completion and still not be permitted to occupy, because fire services commissioning is outstanding, a consultant sign-off has not landed, or a condition of consent has not been satisfied. Those are frequently outside your builder's control and involve the landlord's contractors.
Book your opening date, your staff start dates and your first patients against the occupancy permit, not against practical completion. Every practice that has done the opposite has a story about it.
What to do in the week before
Walk it properly, with time. Two hours with a notepad, room by room, opening every door and every drawer, turning on every tap and every light. Defects you find now go on the list. Defects you find in March are an argument.
Take the handover documents seriously. Operation and maintenance manuals, warranties, as-built drawings, commissioning results, the essential safety measures schedule. These are far easier to obtain before the final payment than after it.
Check the things you cannot see. Mechanical commissioning results against the design, and pressure or air change verification where the design called for it.
Confirm keys, access, alarm codes and who holds what. Mundane, and it delays more openings than anything structural.
If you genuinely aren’t ready to accept it
Practical completion can be disputed, and occasionally should be, where something genuinely prevents the premises being used for their purpose. A sterilisation room that cannot be commissioned, a surgery whose services do not work, an accessible toilet that does not comply.
Those are not defects. They are incomplete works, and the distinction matters. Be able to articulate which one you are claiming.
Sources and further reading
Contract terms vary between standard forms and bespoke contracts. Have yours reviewed by a construction lawyer before signing.
The National Construction Code: building classification, fire separation, egress, sanitary provisions and access.
Source for AS/NZS 4815 and 4187 reprocessing, AS 1428.1 access and AS 1668.2 ventilation. The standards themselves are purchased, not free.
Questions
What does practical completion mean?
The point at which the works are complete except for minor defects and omissions that don’t prevent the building being used for its intended purpose. It means usable, not flawless.
Can I refuse practical completion because of a defects list?
Generally no. Minor defects go on a list and are rectified during the defects liability period; they do not prevent practical completion. What can prevent it’s incomplete work that stops the premises being used for their purpose, which is a different claim and should be framed as one.
Is practical completion the same as an occupancy permit?
No. Practical completion is contractual, between you and your builder. An occupancy permit or occupation certificate is statutory, issued by the building surveyor or certifier. You can reach practical completion and still not be permitted to occupy.
What does practical completion trigger?
Possession passes to you, the defects liability period begins, part of the retention is released, insurance responsibility shifts, liquidated damages stop running where they apply, and the defects list is issued.
What should I do before accepting it?
Walk the premises properly with time, room by room. Collect the handover documents, warranties, as-built drawings and commissioning results while you still have leverage. Check mechanical commissioning against the design. Confirm keys, access and alarm codes.
Send us the floor plan
A site assessment tells you what the tenancy can take and what it will cost to get there, ideally before you have signed for it.