Facilities Manual
Beneficial Occupancy and Substantial Completion
Volume 5, Chapter 17
- 17.1 TAKING BENEFICIAL OCCUPANCY
- 17.2 DETERMINING SUBSTANTIAL COMPLETION
- 17.3 ENDING BUILDER'S RISK INSURANCE
- 17.4 REDUCING LIQUIDATED DAMAGES AFTER SUBSTANTIAL COMPLETION
INTRODUCTION
This chapter addresses procedures to follow when the University wishes to occupy or use part of the work before it is completed (Beneficial Occupancy), or when the contractor requests to be relieved of certain responsibilities because the work is mostly completed (Substantial Completion).
17.1 TAKING BENEFICIAL OCCUPANCY
References:
- Long Form, General Conditions.
Beneficial Occupancy is the term used to describe the procedure when the University occupies or makes use of any part of the work prior to Substantial Completion (see 17.2) or, if no Notice of Substantial Completion has been issued, then Final Completion (see 18.4). The presence of the University at the project site may cause disruption of the contractor's activities; therefore, Beneficial Occupancy is subject to conditions set forth in the General Conditions.
The University is not required to take Beneficial Occupancy and may wait for Final Completion to occupy and use the site. However, if the University decides to occupy any portion of the project space prior to Substantial Completion or, if no Notice if Substantial Completion has been issued, then Final Completion, the University is required to issue a Certificate of Beneficial Occupancy (see RD3.7). A Certificate of Beneficial Occupancy shall not be issued without concurrence of the Designated Campus Fire Marshal and the Certified Building Official if Beneficial Occupancy will occur prior to Substantial Completion.
Coverage under University's Builder's Risk insurance will end on the date of Final Completion recited in the Notice of Completion filed by University, not on Beneficial Occupancy or Substantial Completion. (Additional information about the termination of Builder's Risk coverage is described in sections 11.6.4 and 17.3 below).
17.2 DETERMINING SUBSTANTIAL COMPLETION
References:
- Long Form, Exhibit, Certificate of Substantial Completion.
- Substantial Completion and Contract Closeout Flowchart.
Substantial Completion means that stage in the progress of the work, as determined by the University's Representative, when the work is complete and in accordance with the contract documents except only for completion of minor items which do not impair the University's ability to occupy and fully utilizing the work for its intended purpose.
A Certificate of Substantial Completion shall not be issued until after a Certificate of Occupancy (see RD3.9) is issued by the Certified Building Official, unless in case of Beneficial Occupancy (see section 17.1 above), all work is in place, all required agency approvals have been received, and all systems and equipment are fully functioning. Minor items (punch list) shall include only patching, repair or replacement, and clean-up. Examples of acceptable punch list items include replacement of light switches, touch-up painting, repair of scratches on walls or floors, replacement of locks which do not function properly, replacement of filters or light bulbs, and other similar items.
The University and contractor agree that items to be finished after issuance of the Certificate of Substantial Completion can be accomplished while the University fully occupies and utilizes the facility for its intended purpose. University may accept responsibility for utilities, security, and maintenance upon the issuance of the Certificate of Substantial Completion.
If contractor gives notice to University's Representative that the Work is substantially complete, unless University's Representative determines that the Work is not sufficiently complete to warrant an inspection to determine Substantial Completion, University's Representative will inspect the Work, and prepare and give to contractor a comprehensive list of items to be completed or corrected before establishing Substantial Completion. Contractor shall proceed promptly to complete and correct items on the list. Failure to include an item on such list does not alter the responsibility of Contractor to complete all Work in accordance with the contract documents. University's Representative will make an inspection to determine whether the Work is substantially complete. If University's Representative's inspection discloses any item, whether or not included on the list, which must be completed or corrected before Substantial Completion, contractor shall, before issuance of the Certificate of Substantial Completion, complete or correct such item. Contractor shall then submit a request for another inspection by University's Representative to determine Substantial Completion. Costs for additional inspection by University's Representative shall be deducted from any monies due and payable to Contractor.
When University's Representative determines that the Work is substantially complete, University's Representative will arrange for inspection by the Designated Campus Fire Marshal, the Certified Building Official, and other officials (e.g., those from Environmental Health and Safety), as appropriate, for the purpose of issuing a Certificate of Occupancy. After a Certificate of Occupancy has been issued by the Certified Building Official the University's Representative will prepare a Certificate of Substantial Completion on University's form, which, when signed by University, shall establish the date of Substantial Completion and the responsibilities of University and Contractor for security, maintenance, utilities, insurance, and damage to the Construction Work.
The Building Official shall not issue a Certificate of Occupancy without the concurrence of the Designated Campus Fire Marshal (see RD3.8). All work must be completed in compliance with building codes and the contract documents.
17.3 ENDING BUILDER'S RISK INSURANCE
Builder's risk insurance coverage terminates on the date of Final Completion in the Notice of Completion filed by the University when the construction of the project is complete. (Coverage terminates for a Job Order on the date of Final Completion in the Inspection Acceptance issued by the University, and for all Job Orders on the date of Final Completion in the Notice of Completion for the entire project covered by the JOC contract). If construction of the project is complete at the time of Beneficial Occupancy or Certificate of Occupancy but the Notice of Completion will not be filed contemporaneously, project managers must so inform their campus contract administrator, UC Risk Services, and the University's insurance broker to determine whether or not termination of Builder's Risk Insurance coverage is appropriate. Submission of the Request to Extend or Terminate Builder's Risk Insurance at least 10 days prior to the date of termination on the certificate of insurance will prevent an accidental lapse of coverage if construction is not completed by the originally anticipated date and will stop the accrual of premiums if the project is completed early.
A Facility will need to provide evidence of completion of construction when requesting cancellation of Builder's Risk insurance for a project.
17.4 REDUCING LIQUIDATED DAMAGES AFTER SUBSTANTIAL COMPLETION
References:
- Long Form, General Conditions.
The University, at its discretion, may reduce the per-diem charge for liquidated damages (see 15.6) assessed for delays (see 13.4) that occur after the date of Substantial Completion.
Revised August 29, 2018