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Practical Completion in FIDIC Contracts: The Real Meaning Explained
1. 🔍 Is ‘Practical Completion’ a FIDIC Term?
Let’s clear up a classic confusion that even seasoned project managers run into. If you flip through any FIDIC contract—Red, Yellow, Silver, 1999 or 2017 edition—you won’t find the phrase “Practical Completion” anywhere. Instead, FIDIC has its own language: terms like “Taking Over”, “Substantial Completion”, and “Defects Notification Period” take center stage.
So, where does “Practical Completion” come from? That’s a British legacy—born in the JCT (Joint Contracts Tribunal) forms. If you’ve built in the UK, you’ve seen it in every contract. But in FIDIC? You’re on different ground.
2. 🎯 FIDIC’s Equivalent: ‘Taking Over’ or ‘Substantial Completion’
Don’t worry—just because FIDIC skips the words doesn’t mean it skips the concept! FIDIC uses different terms for the same key project milestone:
- “Taking Over” (the official milestone, in both 1999 & 2017 editions)
- “Substantial Completion” (the condition for Taking Over)
You’ll find these explained in:
- FIDIC 1999 Sub-Clause 10.1 [Taking Over of the Works and Sections]
- FIDIC 2017 Sub-Clause 10.1 [Taking Over of the Works]
What does “Taking Over” mean in FIDIC?
It’s that magic moment when the Employer can finally use the Works for their intended purpose. The building or facility might still have some “snagging” items left (think: a missing door handle, minor paint touch-ups), but overall, the Employer can move in, run operations, or switch on machinery.
3. 🏗️ What Actually Happens at This Stage?
Let’s break it down step-by-step, because this is where FIDIC and JCT really start to look like cousins:
A. For the Contractor:
- Application for the TOC: The Contractor applies for a Taking Over Certificate (TOC) from the Engineer.
- Site Inspection: The Engineer walks the site, checks for ‘substantial completion,’ and lists minor items for later (“snag list”).
- TOC Issued: If satisfied, the Engineer issues the TOC. If not, you’ll get a punch list to complete before handover.
B. For the Employer:
- Risk Shifts: Now, the risk of loss or damage to the Works generally passes from Contractor to Employer (with a few exceptions).
- Can Occupy/Use: The Employer can start using the Works—move in, start up equipment, open to the public.
- Defects Notification Period (DNP) Starts: FIDIC’s version of the Defects Liability Period—usually 12 months—starts ticking.
- Release of Retention Money: A chunk of retention money is released at TOC. The rest comes after the DNP and all defects are fixed.
- Delay Damages Stop: Any liquidated damages for delay stop accruing once Taking Over is certified.
4. 🥊 Practical Completion vs. Substantial Completion vs. Final Completion
Let’s see how these terms stack up side-by-side (because it can get confusing!):
| Term | Where Used | What It Means |
|---|---|---|
| Practical Completion | JCT, UK contracts | Works are usable, Employer can take possession, minor items left |
| Substantial Completion | FIDIC (concept) | Works can be used for intended purpose, minor items left |
| Taking Over | FIDIC (official) | Employer formally accepts the Works |
| Final Completion | Both | All defects fixed, DNP/Defects Liability Period ends, all payments released |
5. 💡 Why Does This Distinction Matter?
Mixing up these terms is more than just semantics—it can cause:
- Arguments about when the Employer can use the works
- Confusion over insurance and risk
- Disputes about when defects must be fixed
- Delays in releasing payments
6. 🗂️ Real-World Example
You’re the Contractor, racing to finish a new data center. The client wants to move in, but in the last week you’re still cleaning, fixing a few door handles, and waiting for some missing aircon grills. But the fire alarm works and the client’s IT racks can be installed.
In FIDIC, you’d apply for Taking Over. The Engineer inspects, writes up a minor snag list, but agrees you’re done enough for the client to use the site.
In a JCT contract, this is Practical Completion. Same stage—different words!
7. 🤔 Final Takeaway
“Practical Completion” isn’t a FIDIC contract term—but the concept is. If you hear it on a FIDIC job, translate it as “Taking Over,” and check your contract’s requirements!
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