Dear Danya,

If you have a soft copy that can be downloaded from somewhere, please provide the link and we will read the Form of Contract and report to you with our findings regarding your question.

With kind regards,

Samer

Dear Danya,

What Form of Contract are you working with?

And what is the Dispute does the Developer have with the Contractor?

With kind regards,

Samer

Danya:

Don’t let the size of the Punch List impress you. My very first job as a field engineer had a 600 pages punch list. It was a 304 units Condo, 16 units per floor 19 floors and common facilities on ground floor, a subsidized housing for low income households, at this time was about $19,000,000US dollars, this was 30 years ago. The Punch List was an average of 2 pages per apartment unit with punch list items as; a paint stain, a scratch on a bathtub, a warped door, a missing window operator and so on.

What matters for substantial completion is if it can be used for its intended purpose. It does not mean it has to be purely 100% flawless. The owner cannot use 100% flawless excuse to reject final completion; otherwise it would be endless or at his own will.

As the Contractor, on my Claim I would start with assigning a monetary value to the final punch list pending items, with an estimate for a time to do the repairs, a simple spreadsheet should do it. For my condo although we got the final acceptance let assume some numbers:

The remaining items from the Final Punch List after review could be estimated for labor cost as per a 6 men crew, two days per floor (say 3 crews working at the same time in different floors) would be $10,000.00 at pay rates according to the year plus say the same amount for materials for a total of $20,000.00.

Grand total would be 14 days at $3,000/day liquidated damages for this job $42,000 plus $20,000 for repairs for a total of $62,000 or 3 tenths of a percent of total contract amount. Nothing to get you in red and very far from getting you broke.

Do you believe this would justify anything over $100,000 in penalty fees?

Remember these minor items not cleared out during punch list can always be cleared during the warranty period which by law in my jurisdiction is 1 year for visible defects and 10 years for hidden defects. The law protects the Owner; there is no excuse to be abusive.

As soon as the Contractor realized he was in a trap he should have asked for a monetary settlement on the pending items and request for a stoppage of the clock, this for the record.

Now is too late to avoid getting into court, is time to get some numbers for cost and time issues. Your team got to help your lawyers. Be reasonable and keep it simple as to make it easier for the judge to side with your position and write his award statement.

Best regards,
Rafael

I am using the comma as the thousands separator, per US standards.

Hi Danya

Since you have an adjudication system then go for it.

The same risk applies in that he may go bust.

Best regards

Mike Testro

Hi Danya

Since you do not have adjudication in South Africa then your most direct route would be to terminate the contract and pursue him through the courts - the risk is that he will go bust before you get your money.

Best regards

Mike Testro

Hi Danya

It is rare for there to be a contractual definition of what conditions are required for practical completion.

Generaalt speaking if the building is fit for occupation - subject to a few punch items - then it is practically complete.

This will include final test and commissioning - operations and manuals and training.

If the occupier is eager to take possession then this is normally not a problem but if there is no eager occupier then the owner is naturally reluctant to release the contractor from his obligations.

I an currently engaged in an adjudication on this very point.

Best regards

Mike Testro

Dear Danya,

You need to research the type of Contracts that are adopted in your part of the world and review the Conditions of Contract.

Usually the verification of the "Practical Completion" has an independent clause and the "Delay" has a clause of itself.

Delay in Practical Completion should be studied and the party causing this delay will be identified subsequently. If the Owner is the cause of the delay, then the Contactor might claim for overheads. On the other hand, if the Contractor is the cause of delay, the Client might implement delay penalties.

If you ask more specific questions, we will be able to provide you with detailed answers hopefully.

Good luck in your dissertation,

Samer