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Last edited 20 Oct 2020
Traditional contract: occupation and defects liability period
The occupation and defects liability period takes place after the client has taken possession of the development for occupation. During this stage, any defects are rectified and the final certificate is issued signifying that the construction works have been fully completed. As the development is now occupied, and the contractor no longer has possession of the site, close co-operation is required between the contractor and the client so as so not to disturb occupants, whose activities will take priority over work required to rectify defects.
The client reports any defects in the works to the contract administrator. On large projects the contractor may set up a hot desk for responding to any complaints or to provide assistance required by the incoming occupants. The contract administrator, takes advice from the consultant team and instructs the contractor to rectify the defects. The contractor and client agree a programme for rectifying defects in a way that minimises disruption to the client.
If rectification works are significant, it may be necessary for the client to re-appoint the principal designer (whose appointment may have terminated on certification of practical completion) and it may be necessary to amend the health and safety file.
If any amounts are due to the contractor, the cost consultant prepares valuation statements for interim certificates. The contract administrator checks the preparation of the valuation statements and issues interim certificates (payment notices). The notices must be issued within five days of the dates for payment set out in the contract. If the client intends to pay a different amount from that shown on an interim certificate, then they must issue a pay less notice giving the basis for the calculation of the amount they intend to pay. The client makes payments to the contractor by the final date for payment.
At the end of the defects liability period, the contract administrator arranges inspections of the works and prepares a schedule of defects which is issued to the contractor. The contract administrator agrees the programme for rectification of items on the schedule of defects with the client and contractor, which should in any event be rectified within a reasonable time.
The contractor completes the building owner's manual, rectifies items listed on the schedules of defects and informs the contract administrator. The contract administrator arranges final inspections of the works and if satisfied issues the certificate of making good defects.
If a site waste management plan has been prepared, the contractor may reconcile the planned handling of waste (as described in the site waste management plan) against what actually happened and provide an explanation of any differences.
The cost consultant prepares the final account in consultation with the contractor and issues it to the contract administrator. The contract administrator checks the preparation of the final account and issues the final certificate (payment notice) this will include the release of any remaining retention. If the client intends to pay a different amount from that shown on the certificate, then they must issue a pay less notice giving the basis for the calculation of the amount they intend to pay. The client makes payment to the contractor by the final date for payment.
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