Key dates and sectional completion All commercial projects, particularly large ones, may reach practical completion (PC) in stages.Sectional completion is best used where an employer wants the contractor to complete a defined part of the works so that it or another contractor can take over that section entirely.Most contracts will contain a right to have the works completed in sections, and a corresponding right for the contractor to expect a reduction in its LD liability.
This may mean the employer has to incur additional costs or suffer a delay in receiving income from the project.
For the contractor, delay to the completion of the project may result in a liability for delay damages to the employer.
Although it is worth remembering that liquidated damages can be used in other circumstances, this guide will focus on LDs for delay.
The importance of time in construction contracts Extensive provisions are made in construction contracts for establishing the date by which a contractor must complete the work that it has agreed to perform.
Despite the emergence of best practice construction methods and development of computerised critical path programming, many construction projects will still overrun their original contract period.
For an employer, a delay will mean that the asset being constructed will not be able to be used when originally intended.In fact, if the clause is valid and applicable, employers will be entitled to the specified LDs even if they have sustained no actual loss.From a contractor's perspective, LDs effectively act as a limit on its liability for delay.The contractor would not then be expected to carry out any further work to that section, although it would remain liable for defects.The benefit to the contractor of sectional completion is similar to that of practical completion in that it is relieved of some of its contractual obligations, including insurance and a proportion of LDs.Most standard forms of construction contract have clauses to reduce a contractor's liability for LDs proportionately if any part of the works is certified as complete before the contract is completed in full.