What are the stages of completion during construction projects?

Completion milestones are important as they often relate to payment milestones and clearly define the requirements to be met at each stage.  Having clearly defined completion milestones will help avoid disputes and claims during your project both internally and externally and ensure everyone understands the objectives to achieve at each milestone.

Completion milestones are very important to the commissioning team since they define the stages leading up to and during commissioning at the end of the project.  Any completion milestones that are not clearly defined will cause challenges for the commissioning team. Check this additional information on how to set your project up for success 9 CSU (Commissioning and Startup) Critical Success Factors

Mechanical Completion

Mechanical Completion is the point in the project when construction is complete and subsystems are ready to be handed over to the commissioning team.  There can be many mechanical completion milestones defined for the various subsystems of the project.  It is rare that a single mechanical completion milestone is defined and the entire project construction is complete all at once.  Instead, mechanical completion of the electrical distribution system may be separate from mechanical completion of the mechanical piping system (as an example) so that commissioning can proceed while other areas of the plant continue to be installed. If you’d like to learn more about mechanical completion, we offer you this in depth-training, please check it out Mechanical Commissioning Training Course  

Mechanical completion is when the construction team hands the subsystem over to the commissioning team.  It is important to define this clearly from a safety perspective since construction must be complete while systems are being started and tested for the first time.  Construction can continue on other subsystems, but you cannot be testing equipment while someone is still installing components on the equipment under test without proper boundary isolations established.

It is important to plan mechanical completion by system rather than by equipment, since several components are required for a subsystem to function.  As an example, it is not helpful to define mechanical completion for a pump, since the pump will not be able to be tested without power available, piping and flow meters installed, and automation to control the pump.  All these components make up the pumping subsystem and should be part of the same mechanical completion milestone.

A P&ID walkthrough is often completed at mechanical completion.  This is where the construction team and commissioning team jointly walk through the site and highlight the P&ID drawings to ensure all components are installed.  All piping is confirmed to be installed, valves are confirmed to be in the correct direction, and all instrumentation is confirmed to be installed.  Any missing components are identified to the construction team to be addressed prior to mechanical completion.

The physical installation is confirmed complete at mechanical completion, as well as the associated documentation.  The document deliverables required at mechanical completion are the O&M manuals and as-built drawings.  The construction team is required to have an accurate up-to-date set of drawings with red-line markups indicating the current state of equipment in the field, and these are handed over to the commissioning team.  Without an accurate set of as-built drawings, it will be difficult for the commissioning team to work with the equipment, and dangerous for the operations team to operate and isolate equipment in an unknown state.

A mechanical completion certificate is a good document to define on your project, since it signifies the formal handover from one group to another.  A signed document confirms that all equipment is installed correctly, all document deliverables are complete, and signifies the formal handover of care, custody, and control from one group to another so that there is no confusion on who is responsible for the equipment.

Substantial Completion

Substantial completion is the point in the project when the work is complete and being used for it’s intended purpose.  Substantial completion occurs once the commissioning team has fully tested the equipment and it is ready to be placed in service.  This is the point in the project when the new assets are handed over to the owner and are available for commercial service.

Similar to mechanical completion, the project team will perform a joint walk-through with the owner’s representative to establish completion of the work and view any outstanding deficiencies.  Final deficiencies are addressed at substantial completion with minor deficiencies to be address after handover.

Substantial completion is typically when the warranty period starts, once the equipment is placed in-service.  The duration of the warranty period will be defined in your contracts, and can be anything from months to years.  The warranty period is when any minor remaining deficiencies are addressed by the contractor.  The warranty period is also when the contractor must provide service to the equipment should there be any failures or latent defects of the equipment now that it is in-service and operating.

Substantial completion is also when the performance guarantee periods will start.  A performance guarantee period is when the equipment is monitored and evaluated to see if it meets specified technical requirements over a period of time.  There can be costs associated with meeting technical objectives that are paid after a period of time should the system operate as required.  For example, there may be losses to be measured or guaranteed availability requirements to be met.  If performance targets are met, the amounts withheld are paid to the contractor.  But if the system does not achieve performance targets, the owner can keep a portion of the money withheld for performance guarantees.

It is important that maintenance tasks as defined in the O&M manuals are completed.  If maintenance tasks are not completed, this can be used to invalidate the warranty and the owner is then responsible to pay for warranty issues.  Complete records of maintenance should be kept to be able to demonstrate that the prescribed maintenance is complete and that warranty requirements remain in effect.

The remaining contract deliverables are required at substantial completion, such as final as-built drawings in CAD version.  Sometimes the CAD version of drawings is not available at substantial completion since the CAD process can take some time.  In this case, a copy of the red-line markups are left at site for the operations team to use while CAD drawings are created and reviewed.  Also required are final O&M manuals that include all test results and calibration details, warranty information such as points of contacts and durations, and all other project historical information that could be required in the future by the owner or operations team.

A Provisional Acceptance Certificate can be issued at substantial completion.  This signifies that the contractor has achieved substantial completion and triggers payment milestones for the work.  A small percentage of the contract amount is withheld until final completion.  This holdback amount is withheld by the owner to ensure the contractor continues to fulfill their warranty obligations during the warranty period, and can be used to cover warranty costs should the contractor fail to perform the tasks.

Final Completion

Final completion is when the project is fully closed out and no actions remain.  All deficiencies are addressed, the warranty period is complete, and all contracts are closed.  The contractor has completed all of their contractual obligations and no longer has any role with the in-service assets.  Any issues encountered with the new installation become the owner’s responsibility from this point forward.  The contractor can certainly be contacted for advice or assistance, but this may be at an additional cost to the owner should assistance be required.

If on-site support from the contractor or commissioning team was required during the warranty period, this on-site support would be discontinued at final completion.  Any additional on-site support would be at additional cost to the owner.

Since the project has been in operation for a period of time at final completion, there are not many documentation deliverables required.  Typically formal documentation is completed to close contracts, but all operational document deliverables should have already been produced at substantial completion.

A Final Acceptance Certificate can be issued at final completion.  This signifies that the contractor has achieved final completion and all remaining commercial terms are closed out.  Any remaining holdback funds that were withheld are paid to the contractor.  Performance targets are finalized and any hold backs amounts for performance guarantees are calculated to determine final payment to the contractor.

Mechanical completion, substantial completion, and final completion are important steps to understand during the commissioning process, since they are important to keep the work organized and to achieve contract commercial milestones of the project. To understand more about contracts, please check this informative article Commissioning Contracts 101: Everything You Need To Know