MDC Systems - Are We There Yet - Substantial-Completion

1. ASHRAE Pittsburgh Chapter March 6, 2014
Are We There Yet?
What is "Substantial Completion" ?
(…and how do we know when we get there?)
E. Mitchell Swann P.E., LEED AP
F. CIBSE, C.Eng
Principal
MDCSystems®
www.MDCSystems.com
Copyright E. Mitchell Swann & MDC Systems
2

2. Program Overview
What is “Substantial Completion”
Implication of the selected definition on
actual project completion
New considerations in the industry
Example circumstances
Summary
Questions & Answers
3

3. Program Overview
Are We There Yet? What is "Substantial Completion"
and how do we know when we get there?
"Substantial completion": These two words can change
the course of history. Well, the course of your payment
history, anyway. Many contracts contain that phrase as
a key indicator of major project milestones for the
release of retainage, the start of warranty periods and
more frequently everyday, the start up of energy
measurement and verification programs. But the
definition of "substantial" and "complete" are wide and
varied. This program will explore the permutations and
implications of the various interpretations of "substantial
completion" and how it can affect the happy family that is
your project team.
4

4. So…
what
is
Substantial Completion?
5

5. Some synonyms….(?)
Mechanical Completion
Unit is essentially complete for
start-up operation and test run.
All major work is completed.
Minor work not interfering with
operation may not be completed,
such as punch list and minor
touch-up work.
(from dictionaryofconstruction.com)
6

6. U
Mechanical other stuff to do…
Completion
7

7. Beneficial Occupancy
When an owner of a property
can use it before all the
construction is completed.
(from Black’s Law Dictionary)
Use of a building, structure,
or facility by the owner for its
intended purpose (functionally
complete), although other
contract work, nonessential to the
function of the occupied section,
remains to be completed.
(emphasis added)
(from theconstructiondictionary.com)

8. Certificate of
Occupancy
A document issued by a local
government agency or building
department certifying a building's
compliance with applicable building
codes and other laws, and
indicating it to be in a condition
suitable for occupancy.
The purpose is to prove
that,
according to the law, the building is
in livable condition.A certificate of occupancy is evidence that the
building complies substantially with the plans
and specifications that have been submitted to,
and approved by, the local authority.
(emphasis added)

9. So what is substantial completion?
The answer varies,
but…
I know it when I see it!
- Judge Potter Stuart
10

10. So how about this?
Section A.9.8.1 (from the AIA 201 - General Conditions of the Contract for Construction) :
“the stage in the progress of the Work when the Work
or designated portion thereof is sufficiently complete in
accordance with the Contract Documents so that the
Owner can occupy or utilize the Work for its intended
use.”
Sounds like….
Is “mechanical completion” required?
Is a C of O required?
11

11. Why does this matter?
The date of substantial completion can establish…
…the date that the owner becomes responsible
for the property, (the “clock” starts - builders’ warranty);
…the date that a contractor is no longer fully
liable for delayed completion;
…the date the “Statute of Limitations” clock starts
(what’s this?) ;
…the date the “Statute of Repose” clock starts
(what’s that?);
12

12. The
date of substantial
completion
(…could become a day that might live in infamy.)
Builders Warranty:
…the hands of time….
Written statement by a builder
assuring that a project was
completed according to a stipulated
set of standards. It protects the buyer
from latent defects.
Patent Defects
Latent Defects
13

13. The date of substantial completion
(…could become a day that might live in infamy.)
…a contractor is no longer fully liable for delayed completion
Liquidated Damages:
Monetary compensation for a loss, detriment, or
injury to a person or a person's rights or
property, awarded by a court judgment or by a
contract stipulation regarding breach of
contract. (Legal Law Dictionary)
(Think of it as "contract performance
insurance.”)
LIMITATIONS!Allowed when exact quantification of damages is difficult (but ARE “real”!)
MUST be “reasonable” with respect to the “value” of the damages that
could be incurred.
NOT to be considered/”constructed as a “penalty”.
14

14. The date of substantial completion
(…could become a day that might live in infamy.)
Statute of Limitations:
A law that restricts the time within which legal
proceedings may be brought.
…a fundamental part of European and U.S. law.
…apply to both civil and criminal actions,
…designed to prevent fraudulent and stale claims
…after all evidence has been lost…
…after the facts have become obscured over time…
…defective memory, death, or disappearance of witnesses.
…a defense that is ordinarily asserted by the defendant
…the parties may either shorten or extend the prescribed time
period by agreement, such as a provision in a contract.
15

15. The date of substantial completion
(…could become a day that might live in infamy.)
Statute of Repose:
Provides a date upon which the action no longer can be
taken - it entirely cuts off an injured person's right of
action even before it accrues.
…stricter deadline than statute of limitations
…it may not be tolled by fraud, discovery of injury, etc.
…neither an avoidance nor a defense
…because the cause of action does not exist after “repose”
…bars an action after a specified period of time has run
from the occurrence of some event.
…but NOT injury or “discovery”
16

16. New considerations…
Commissioning
between “complete enough” and “acceptable”
Energy (& resource) Performance M&V
“Green Certification”
Outside the project “bubble”
Validation
Regulatory Hurdles
Accreditation
Specialty Operations
17

17. New considerations…
Commissioning
integrated application of a set of engineering techniques
and procedures to check, inspect and test every operational
component of the project, from individual functions, such
as instruments and equipment, up to complex
amalgamations such as modules, subsystems and systems.
18

18. New
considerations
Energy
(& resource)
Performance M&V
19

19. New considerations…
“Green Certification”
A third party vetting of the
completed project?
20

20. New considerations…
Validation
Pharmaceuticals
biotechnology
medical devices
21

21. New considerations…
Accreditation
Hospitals
Animal Facilities
Data Centers
22

22. So the on-going question is….
ARE
WE
THERE
YET?
23

23. So there can be
variations upon a theme.
Let’s consider…
24

24. Multi-story Laboratory Building
Program features
Biotech research
GMP compliant
BL-3 Suites
Sterilization
operations
Laboratory
Information
Management
System
Building features
VAV HVAC
systems
DDC BAS
integrated to
existing campus
Sterilization line
by equipment
provider
Commissioning
(total building)
25

25. New Critical Care Hospital
Program features
400 std beds
60 CCUICU beds
Incl. 20 bed burn unit
Operating Suites
Standard
Transplants
BurnTrauma
MRI Suites (2)
ASHE
Accreditation
Building features
Provisions for TB
isolation
“Controlled
Environment”
Operating Theatres
DDC BAS
MRI by equipment
provider
Commissioning
26

26. Convention Center Hotel
Program features
500 Rooms
Meeting Rooms
Ballrooms
Restaurants
Fitness Center
Pool
Spa
Building features
DOAS
LEED Platinum
Connected to
Convention
Center Plant
Anchor for
downtown
redevelopment
Location of next
G8 + conference
27

27. What gets done after it’s “done”…

28. The sources of dispute

29. Impact of Liquidated Damages on Risk of Dispute

30. Things to think about
Contract language…
…to address specifics (when, what, by whom)
…for “phased” completion
…to define “acceptance”
…to address “what about”s
…and “I thought you meant…”
…to consider…
time.

31. We are all faced with a series of
great opportunities brilliantly
disguised as insoluble problems.
John W. Gardner

32. E. Mitchell Swann P.E.,
LEED AP, F.CIBSE, C.Eng
Principal - MDCSystems®
swann@mdcsystems.com
www.MDCSystems.com
Questions?

33. E. Mitchell Swann, P.E., LEED AP
swann@mdcsystems.com
Principal and Partner
MDC Systems, LLC
Licensed Professional Engineer:
Pennsylvania, New Jersey, New York, Connecticut, California, Michigan, Illinois, Georgia, Kentucky
US Green Building Council LEED Accredited Professional
Mr. Swann has over 20 years of extensive experience on both domestic and international projects in the areas of
management consulting and problem solving, engineering design, project and construction management, forensic
engineering and construction claims analysis. Mr. Swann’s career includes the analysis, evaluation and design of complex
systems across a wide range of industries and buildings types including commercial, institutional and industrial facilities,
hospitals laboratories, pharmaceutical manufacturing, microelectronic operations and data centers. Mr. Swann has chaired
technical committee within national and international organizations and been a contributing author and editor for a number
of technical publications and journals. He is a frequent speaker both nationally and internationally and is a listed member of
the speakers’ bureau in the Distinguished Lecturer program of ASHRAE. He has recently presented on Green Building
issues in Abu Dhabi, Dubai, Delhi, Detroit, Chicago, Seattle, New York City, Indianapolis, Kansas City, Virginia and
Delaware. He is a contributing author to the ASHRAE “Green Guide - The Design, Construction and Operation of
Sustainable Buildings” and co-author of the ASHRAE Survival Guide to Design|Build Project Execution.
Professional Affiliations:
American Bar Association, American Society of Heating, Refrigeration, and Air Conditioning Engineers, International
Society of Pharmaceutical Engineering, US Green Building Council, Defense Research Institute
Other Activities:
Pennsylvania Environmental Council - Board
The Engineer’s Club of Philadelphia - Board of Directors
Enterprise Heights CDC - Board Chair
Drexel University - Alumni Board of Governors
National Association of Asian American Professionals (Philadelphia Chapter) - Board of Directors
National Society of Black Engineers Greater Philadelphia Chapter - President Emeritus

34. MDCSystems® Summary of Services
Program & Project Development
including…
Performance Assessment &
Benchmarking
Project Modeling including…
“What if…” Scenario Analyses
Variability/Sensitivity Analyses
‘Out of Bounds’/”Go - No Go”
Limits
Project Planning including…
Feasibility Studies
Master Scheduling including…
Resource & Constraint Analysis
Project Monitoring including…
Schedule Compliance
Cash Flow & “Burn rate” projections
Resource Utilization
Consulting Services including…
Sustainability/Green Buildings
Peer Review
Practice Management
Forensic Analyses including:
Building Systems:
Architectural incl. Building Envelope
HVAC/Mechanical, Electrical & Piping
Structural
Instrumentation & Controls
Design Errors & Omissions (Standard of
Care)
Differing Site
Conditions
Forensic Project Management®Schedule Analysis
Delay, Disruption, Suspension
&
AccelerationLabor Productivity & Inefficiency
Scope Definition and Change
Termination - Default or Convenience
Procurement - Bid/Award Transparency
Forensic Accounting including…
Valuation of Damages
Overhead & General
Conditions
Business Interruption & Lost Profit

35. MDCSystems®
Providing Expert Project Delivery Solutions Worldwide
MDC Systems is a project and construction management consultancy
with
over 40 years of experience serving a wide array of clients and industries both
nationally and around the globe.MDC has worked on projects as diverse as residential property
developments
to pharmaceutical plants to highway excavation and construction.MDC concentrates its services in primarily four areas:
program management, project management consulting, forensic
engineering
and construction claims consulting.One of the key facets of MDC’s professional staff is our expertise in the
technology driven issues that are so frequently at the heart of today’s complex
projects.
MDC’s construction claims consulting practice combines all of the skills
inherent to our other service offerings and deploys it for our clients when and
where projects don’t go quite as smoothly as everyone had hoped. MDC is an
industry leader in the area of construction schedule development and analysis
including delay, acceleration, interruption and extended duration. MDC pioneered
the court tested and approved Time Impact Analysis methodology for scientifically
analyzing construction schedules and the impact of events upon their execution
and completion.
www.MDCSystems.com

36. Selected Recent Assignments
Engineering Consulting and Project Management, Execution &
Technical Analyses: Construction Claims :
Analysis of Moisture Migration and RH
Control in a Microelectronics Product
R&D Facility (Colorado).
Analysis and Improvement of Energy
Consumption at a “Green” School
(Pennsylvania)
Peer Review & Design Supervision for a
Radiant Heating/Cooling Floor System
(New Jersey)
Peer Review of Schematic Engineering
Design Effort for Hospital Complex
(Qatar)
Analysis of Formaldehyde Outgassing
from Construction Materials
(Pennsylvania)
HVAC System Failures in
Pharmaceutical Packaging Facility
(New Jersey)
Analysis of Process Technology Failure
at Waste Treatment Plant (New Jersey)
Analysis of Piping System Joint
Failures at a Hospital central Plant
(New Jersey)
Analysis of Destructive Vibration
Harmonics on Large Industrial
Compressors at a Chemical Plant
(Louisiana)
Excess Rock Excavation Claim on a Highway
Project - Unforeseen Conditions (New
Jersey)
Electrical Contractor Inefficiency Claim on
Multi-Prime Project (New Jersey)
Electrical Usage Charge Dispute Between
Landlord & Tenant (New York)
Schedule Delays and Change Orders on
multiple Airport Projects for Major
Equipment Supplier (various)
Schedule Delays and Associated Cost
Overruns for Underwater Pipeline Project
(Ireland)
“Standard of Care” Defense - Design of a
Food Processing Facility (Pennsylvania)
“Custom & Practice” - Specifications
Development and Bid Transparency Issues
(California)
“Standard of Care” Defense - Design and
Documentation of a Pharmaceutical Plant
using 3D Modeling (Texas)
“Standard of Care” Plaintiff - Delay and
Cost Overruns for a Pharmaceutical Plant
using 3D Modeling (Singapore)