Are We There Yet - Substantial-Completion
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This document provides an overview and summary of a presentation titled "Are We There Yet? What is 'Substantial Completion' and how do we know when we get there?". The presentation discusses the various definitions and interpretations of the term "substantial completion" and how it impacts construction projects. It notes that substantial completion determines important milestones like the start of warranty periods and energy measurement programs. However, the definitions of "substantial" and "complete" can vary widely. The presentation explores different understandings of substantial completion and how the determination of this date can affect project schedules, liability, and payment timelines. It also discusses new considerations in determining substantial completion related to commissioning, certification processes, and regulatory requirements.
Are We There Yet - Substantial-Completion
- 1. ASHRAE Pittsburgh Chapter March 6, 2014 Are We There Yet? What is "Substantial Completion" ? (…and how do we know when we get there?) E. Mitchell Swann P.E., LEED AP F. CIBSE, C.Eng Principal MDCSystems® www.MDCSystems.com Copyright E. Mitchell Swann & MDC Systems 2
- 2. Program Overview What is “Substantial Completion” Implication of the selected definition on actual project completion New considerations in the industry Example circumstances Summary Questions & Answers 3
- 3. Program Overview Are We There Yet? What is "Substantial Completion" and how do we know when we get there? "Substantial completion": These two words can change the course of history. Well, the course of your payment history, anyway. Many contracts contain that phrase as a key indicator of major project milestones for the release of retainage, the start of warranty periods and more frequently everyday, the start up of energy measurement and verification programs. But the definition of "substantial" and "complete" are wide and varied. This program will explore the permutations and implications of the various interpretations of "substantial completion" and how it can affect the happy family that is your project team. 4
- 5. Some synonyms….(?) Mechanical Completion Unit is essentially complete for start-up operation and test run. All major work is completed. Minor work not interfering with operation may not be completed, such as punch list and minor touch-up work. (from dictionaryofconstruction.com) 6
- 6. U Mechanical other stuff to do… Completion 7
- 7. Beneficial Occupancy When an owner of a property can use it before all the construction is completed. (from Black’s Law Dictionary) Use of a building, structure, or facility by the owner for its intended purpose (functionally complete), although other contract work, nonessential to the function of the occupied section, remains to be completed. (emphasis added) (from theconstructiondictionary.com)
- 8. Certificate of Occupancy A document issued by a local government agency or building department certifying a building's compliance with applicable building codes and other laws, and indicating it to be in a condition suitable for occupancy. The purpose is to prove that, according to the law, the building is in livable condition.A certificate of occupancy is evidence that the building complies substantially with the plans and specifications that have been submitted to, and approved by, the local authority. (emphasis added)
- 9. So what is substantial completion? The answer varies, but… I know it when I see it! - Judge Potter Stuart 10
- 10. So how about this? Section A.9.8.1 (from the AIA 201 - General Conditions of the Contract for Construction) : “the stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.” Sounds like…. Is “mechanical completion” required? Is a C of O required? 11
- 11. Why does this matter? The date of substantial completion can establish… …the date that the owner becomes responsible for the property, (the “clock” starts - builders’ warranty); …the date that a contractor is no longer fully liable for delayed completion; …the date the “Statute of Limitations” clock starts (what’s this?) ; …the date the “Statute of Repose” clock starts (what’s that?); 12
- 12. The date of substantial completion (…could become a day that might live in infamy.) Builders Warranty: …the hands of time…. Written statement by a builder assuring that a project was completed according to a stipulated set of standards. It protects the buyer from latent defects. Patent Defects Latent Defects 13
- 13. The date of substantial completion (…could become a day that might live in infamy.) …a contractor is no longer fully liable for delayed completion Liquidated Damages: Monetary compensation for a loss, detriment, or injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract. (Legal Law Dictionary) (Think of it as "contract performance insurance.”) LIMITATIONS!Allowed when exact quantification of damages is difficult (but ARE “real”!) MUST be “reasonable” with respect to the “value” of the damages that could be incurred. NOT to be considered/”constructed as a “penalty”. 14
- 14. The date of substantial completion (…could become a day that might live in infamy.) Statute of Limitations: A law that restricts the time within which legal proceedings may be brought. …a fundamental part of European and U.S. law. …apply to both civil and criminal actions, …designed to prevent fraudulent and stale claims …after all evidence has been lost… …after the facts have become obscured over time… …defective memory, death, or disappearance of witnesses. …a defense that is ordinarily asserted by the defendant …the parties may either shorten or extend the prescribed time period by agreement, such as a provision in a contract. 15
- 15. The date of substantial completion (…could become a day that might live in infamy.) Statute of Repose: Provides a date upon which the action no longer can be taken - it entirely cuts off an injured person's right of action even before it accrues. …stricter deadline than statute of limitations …it may not be tolled by fraud, discovery of injury, etc. …neither an avoidance nor a defense …because the cause of action does not exist after “repose” …bars an action after a specified period of time has run from the occurrence of some event. …but NOT injury or “discovery” 16
- 16. New considerations… Commissioning between “complete enough” and “acceptable” Energy (& resource) Performance M&V “Green Certification” Outside the project “bubble” Validation Regulatory Hurdles Accreditation Specialty Operations 17
- 17. New considerations… Commissioning integrated application of a set of engineering techniques and procedures to check, inspect and test every operational component of the project, from individual functions, such as instruments and equipment, up to complex amalgamations such as modules, subsystems and systems. 18
- 19. New considerations… “Green Certification” A third party vetting of the completed project? 20
- 22. So the on-going question is…. ARE WE THERE YET? 23
- 23. So there can be variations upon a theme. Let’s consider… 24
- 24. Multi-story Laboratory Building Program features Biotech research GMP compliant BL-3 Suites Sterilization operations Laboratory Information Management System Building features VAV HVAC systems DDC BAS integrated to existing campus Sterilization line by equipment provider Commissioning (total building) 25
- 25. New Critical Care Hospital Program features 400 std beds 60 CCUICU beds Incl. 20 bed burn unit Operating Suites Standard Transplants BurnTrauma MRI Suites (2) ASHE Accreditation Building features Provisions for TB isolation “Controlled Environment” Operating Theatres DDC BAS MRI by equipment provider Commissioning 26
- 26. Convention Center Hotel Program features 500 Rooms Meeting Rooms Ballrooms Restaurants Fitness Center Pool Spa Building features DOAS LEED Platinum Connected to Convention Center Plant Anchor for downtown redevelopment Location of next G8 + conference 27
- 27. What gets done after it’s “done”…
- 28. The sources of dispute
- 29. Impact of Liquidated Damages on Risk of Dispute
- 30. Things to think about Contract language… …to address specifics (when, what, by whom) …for “phased” completion …to define “acceptance” …to address “what about”s …and “I thought you meant…” …to consider… time.
- 31. We are all faced with a series of great opportunities brilliantly disguised as insoluble problems. John W. Gardner
- 32. E. Mitchell Swann P.E., LEED AP, F.CIBSE, C.Eng Principal - MDCSystems® swann@mdcsystems.com www.MDCSystems.com Questions?
- 33. E. Mitchell Swann, P.E., LEED AP swann@mdcsystems.com Principal and Partner MDC Systems, LLC Licensed Professional Engineer: Pennsylvania, New Jersey, New York, Connecticut, California, Michigan, Illinois, Georgia, Kentucky US Green Building Council LEED Accredited Professional Mr. Swann has over 20 years of extensive experience on both domestic and international projects in the areas of management consulting and problem solving, engineering design, project and construction management, forensic engineering and construction claims analysis. Mr. Swann’s career includes the analysis, evaluation and design of complex systems across a wide range of industries and buildings types including commercial, institutional and industrial facilities, hospitals laboratories, pharmaceutical manufacturing, microelectronic operations and data centers. Mr. Swann has chaired technical committee within national and international organizations and been a contributing author and editor for a number of technical publications and journals. He is a frequent speaker both nationally and internationally and is a listed member of the speakers’ bureau in the Distinguished Lecturer program of ASHRAE. He has recently presented on Green Building issues in Abu Dhabi, Dubai, Delhi, Detroit, Chicago, Seattle, New York City, Indianapolis, Kansas City, Virginia and Delaware. He is a contributing author to the ASHRAE “Green Guide - The Design, Construction and Operation of Sustainable Buildings” and co-author of the ASHRAE Survival Guide to Design|Build Project Execution. Professional Affiliations: American Bar Association, American Society of Heating, Refrigeration, and Air Conditioning Engineers, International Society of Pharmaceutical Engineering, US Green Building Council, Defense Research Institute Other Activities: Pennsylvania Environmental Council - Board The Engineer’s Club of Philadelphia - Board of Directors Enterprise Heights CDC - Board Chair Drexel University - Alumni Board of Governors National Association of Asian American Professionals (Philadelphia Chapter) - Board of Directors National Society of Black Engineers Greater Philadelphia Chapter - President Emeritus
- 34. MDCSystems® Summary of Services Program & Project Development including… Performance Assessment & Benchmarking Project Modeling including… “What if…” Scenario Analyses Variability/Sensitivity Analyses ‘Out of Bounds’/”Go - No Go” Limits Project Planning including… Feasibility Studies Master Scheduling including… Resource & Constraint Analysis Project Monitoring including… Schedule Compliance Cash Flow & “Burn rate” projections Resource Utilization Consulting Services including… Sustainability/Green Buildings Peer Review Practice Management Forensic Analyses including: Building Systems: Architectural incl. Building Envelope HVAC/Mechanical, Electrical & Piping Structural Instrumentation & Controls Design Errors & Omissions (Standard of Care) Differing Site Conditions Forensic Project Management®Schedule Analysis Delay, Disruption, Suspension & AccelerationLabor Productivity & Inefficiency Scope Definition and Change Termination - Default or Convenience Procurement - Bid/Award Transparency Forensic Accounting including… Valuation of Damages Overhead & General Conditions Business Interruption & Lost Profit
- 35. MDCSystems® Providing Expert Project Delivery Solutions Worldwide MDC Systems is a project and construction management consultancy with over 40 years of experience serving a wide array of clients and industries both nationally and around the globe.MDC has worked on projects as diverse as residential property developments to pharmaceutical plants to highway excavation and construction.MDC concentrates its services in primarily four areas: program management, project management consulting, forensic engineering and construction claims consulting.One of the key facets of MDC’s professional staff is our expertise in the technology driven issues that are so frequently at the heart of today’s complex projects. MDC’s construction claims consulting practice combines all of the skills inherent to our other service offerings and deploys it for our clients when and where projects don’t go quite as smoothly as everyone had hoped. MDC is an industry leader in the area of construction schedule development and analysis including delay, acceleration, interruption and extended duration. MDC pioneered the court tested and approved Time Impact Analysis methodology for scientifically analyzing construction schedules and the impact of events upon their execution and completion. www.MDCSystems.com
- 36. Selected Recent Assignments Engineering Consulting and Project Management, Execution & Technical Analyses: Construction Claims : Analysis of Moisture Migration and RH Control in a Microelectronics Product R&D Facility (Colorado). Analysis and Improvement of Energy Consumption at a “Green” School (Pennsylvania) Peer Review & Design Supervision for a Radiant Heating/Cooling Floor System (New Jersey) Peer Review of Schematic Engineering Design Effort for Hospital Complex (Qatar) Analysis of Formaldehyde Outgassing from Construction Materials (Pennsylvania) HVAC System Failures in Pharmaceutical Packaging Facility (New Jersey) Analysis of Process Technology Failure at Waste Treatment Plant (New Jersey) Analysis of Piping System Joint Failures at a Hospital central Plant (New Jersey) Analysis of Destructive Vibration Harmonics on Large Industrial Compressors at a Chemical Plant (Louisiana) Excess Rock Excavation Claim on a Highway Project - Unforeseen Conditions (New Jersey) Electrical Contractor Inefficiency Claim on Multi-Prime Project (New Jersey) Electrical Usage Charge Dispute Between Landlord & Tenant (New York) Schedule Delays and Change Orders on multiple Airport Projects for Major Equipment Supplier (various) Schedule Delays and Associated Cost Overruns for Underwater Pipeline Project (Ireland) “Standard of Care” Defense - Design of a Food Processing Facility (Pennsylvania) “Custom & Practice” - Specifications Development and Bid Transparency Issues (California) “Standard of Care” Defense - Design and Documentation of a Pharmaceutical Plant using 3D Modeling (Texas) “Standard of Care” Plaintiff - Delay and Cost Overruns for a Pharmaceutical Plant using 3D Modeling (Singapore)