Management contract: occupation and defects liability period
The occupation and defects liability period is the stage after the client has taken possession of the development for occupation when 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, close co-operation is required between the management contractor and the client so as so not to disturb occupants, whose activities will take priority over works contractors rectifying defects.
There are two different forms of contract operating during the defects liability period:
- The contract between the client and the management contractor. The client may have appointed a contract administrator to administer this contract.
- The contracts between the management contractor and each works contractor. These contracts are administered by the management contractor.
[edit] Starting the work stage.
The management contractor arranges a start-up meeting to plan the work stage.
On management contracts, a separate certificate of practical completion is issued for each works contract. This means that defects liability periods may be at different times for each works contract and as a consequence, the management contractor may continue to hold construction progress meetings and issue construction progress reports for continuing works contracts and may have to protect completed work from continuing work.
[edit] Rectifying defects.
If the contract allows, the management contractor may review all relevant events that might be considered to have affected the completion date for each works contract and may adjust their completion dates accordingly.
The client reports any defects in the works to the management contractor. On large projects the management contractor may set up a hot desk for responding to complaints or to provide assistance required by the incoming occupants. The management contractor takes advice on the action necessary to rectify the defects from the consultant team and the management 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.
At the end of the defects liability period for each works contract, the management contractor arranges inspections of the works and prepares a schedule of defects which is issued to the works contractor. The management contractor agrees the programme for rectification of items on the schedule of defects with the client's contract administrator and works contractors, which should in any event be rectified within a reasonable time.
The works contractor rectifies items listed on the schedules of defects, informs the management contractor and provides the management contractor with information for the calculation of the final works contract sum.
The management contractor arranges final inspections of the works contractors works and if satisfied issues a final certificate (payment notice) for that works contract. If the management contractor 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 management contractor makes payments to the works contractors by the final dates for payment. This may include the release of any remaining retention if applicable
The management contractor completes the building owner's manual.
If a site waste management plan has been prepared, the management contractor may reconcile the planned handling of waste against what actually happened and provide an explanation of any differences.
[edit] Issuing the final certificate.
Once the management contractor has received information from all works contractors enabling them to calculate the final works contract sum for each works contract, the management contractor provides the client's contract administrator (or cost consultant) with information allowing them to calculate the prime cost (the cost of the works contracts).
The management contractor co-ordinates preparation of the final report.
The client's contract administrator issues the final certificate (payment notice) under the management contractor's contract. The client makes payment to the management contractor by the final date for payment (this will include the release of any remaining retention).
The client's contract administrator co-ordinates preparation of a final report and issues this to the client.
Issuing the final certificate will normally signify the end of the management contractor's and consultant team's appointments. If post-occupancy evaluation services are required, these may involve a new appointment.
Featured articles and news
OpenUSD possibilities: Look before you leap
Being ready for the OpenUSD solutions set to transform architecture and design.
Global Asbestos Awareness Week 2025
Highlighting the continuing threat to trades persons.
Retrofit of Buildings, a CIOB Technical Publication
Now available in Arabic and Chinese aswell as English.
The context, schemes, standards, roles and relevance of the Building Safety Act.
Retrofit 25 – What's Stopping Us?
Exhibition Opens at The Building Centre.
Types of work to existing buildings
A simple circular economy wiki breakdown with further links.
A threat to the creativity that makes London special.
How can digital twins boost profitability within construction?
The smart construction dashboard, as-built data and site changes forming an accurate digital twin.
Unlocking surplus public defence land and more to speed up the delivery of housing.
The Planning and Infrastructure Bill
An outline of the bill with a mix of reactions on potential impacts from IHBC, CIEEM, CIC, ACE and EIC.
Farnborough College Unveils its Half-house for Sustainable Construction Training.
Spring Statement 2025 with reactions from industry
Confirming previously announced funding, and welfare changes amid adjusted growth forecast.
Scottish Government responds to Grenfell report
As fund for unsafe cladding assessments is launched.
CLC and BSR process map for HRB approvals
One of the initial outputs of their weekly BSR meetings.
Building Safety Levy technical consultation response
Details of the planned levy now due in 2026.
Great British Energy install solar on school and NHS sites
200 schools and 200 NHS sites to get solar systems, as first project of the newly formed government initiative.
600 million for 60,000 more skilled construction workers
Announced by Treasury ahead of the Spring Statement.