What does "substantial completion" indicate in a construction project?

"Substantial completion" signifies that a construction project has reached a stage where it is sufficiently complete for its intended use, even though there may still be minor work remaining to be finalized. This milestone is crucial because it often triggers the transfer of responsibilities from the contractor to the owner, including the assumption of risk and maintenance of the property.

At this point, the project may not be fully completed, meaning that there might be some deficiencies or minor tasks that need attention. However, the key aspect is that the project can be utilized for its intended purpose. The concept of substantial completion is often referenced in contracts to delineate when the contractor can request final payments or when warranties begin.

While final inspections and addressing punch list items are important steps in the project’s completion and handover process, they occur after the substantial completion stage. Substantial completion serves as a significant milestone that allows the project to be occupied or used while still allowing some work to be completed shortly thereafter.