Sectional completion refers to a provision within a construction contract which allows different completion dates to be set for different sections of the works.
Sectional completion is common on larger projects where completing the works in sections allows the client to take possession of the completed parts whilst construction continues on others. For example, where a single building contract requires a contractor to build two adjacent buildings, each of those buildings can be a separate section of the works under the building contract.
When using sectional completion under a JCT contract, the Contract Particulars set out the sections that the works are divided into. There are similar provisions contained in the Contract Data in the NEC suite of contracts. The JCT also provides that a “Section Completion Certificate” or a “Non-Completion Certificate” can be issued in relation to each those sections (see clauses 2.27.2 and 2.28 of the JCT Design & Build 2011 for example).
If a contract provides for sectional completion, then separate liquidated damages can also be agreed for each section of the works.
The parties should be aware that sectional completion of a section is practical completion of that section. In some respects the effects are similar to partial possession, in that the:
- defects liability period (rectification period) for that section commences;
- risk of loss or damage to, and responsibility for, the completed section transfers from the contractor to the employer (with consequent changes to the insurance regime); and
- employer pays half of the retention sum for that section to the contractor.
However, the effects of sectional completion are more certain than partial possession because the parties have already agreed:
- a distinct rate of LADs for each section, so there is no argument about what a proportionate reduction would be;
- a section sum, so there is no argument about what the release of retention should amount to (provided the interim certificates have kept track of sections sums); and
- that there is no need for contractor consent: the architect/contract administrator certifies when a section has been completed.
In addition, if the works are delayed, the architect/ contract administrator can assess whether any individual section has been delayed and by how much.
Sectional completion or partial possession?
Sectional completion differs from partial possession in that it is pre-planned and defined in the contract documents. Typically, if an employer knows in advance that it wants one part of the works finished ahead of the rest, it should provide for sectional completion. There may be exceptions of course such as if the employer and contractor cannot readily define what physically constitutes a section. In some circumstances, the employer may simply require access for a short period, perhaps to install a piece of equipment. In that case the parties can negotiate an early access agreement that is neither partial possession nor sectional completion.
Sectional completion leaves less to chance, because the parties have agreed many of the practical consequences of that completion in advance. So if something does go wrong, it is easier for the employer and architect/contract administrator to deal with delays, changes or even acceleration with sections in place. For example, if a project is already in delay, and then the employer takes partial possession of part of the works, it may be difficult to agree exactly what the reduced rate of liquidated damages should be for the remainder.
