The American Institute of Architects (AIA) defines substantial completion as “the stage in the progress of the work when the work or designated portion is sufficiently complete in accordance with the contract documents so that the owner can occupy or use the work for its intended purpose.”
However, substantial completion can be frustratingly difficult to pin down. In some cases, it’s spelled out in the construction contract. In others, it may be up to the courts to decide. It’s important for contractors and suppliers to understand how substantial completion is determined on their project, so they can take action if they don’t get paid for their work.
Importantly, substantial completion is not final completion. There may be any number of minor items left to complete on any given project. These are commonly noted on a punch list. And completion of these items could take several weeks or months, and could sometimes be out of the control of the contractor involved. Generally, final completion is achieved when the architect or engineer on the job has conducted a final inspection. It is then that the contractor submits a final application for payment as well as all related warranties and releases. But final completion does not cancel out the owner’s continuing right to make a claim against the contractor for defective or incomplete work.
Given the importance of this date, it is advisable to specifically define it within any applicable contract. Whether it is to be the date the actual certificate of occupancy is issued by the appropriate building department, the date the owner occupies the subject property or begins to use the work, or the date certified by the project architect or engineer as the date of substantial completion – having this be an actual, definitive and objective date established within your construction agreement minimizes confusion and provides certainty.