Hi,
Firstly, Completion is defined under clause 11.2(2), if the Client is able to use the works and Others able to do there work then Completion has been achieved and under clause 30.2 the PM must certify the date on which it was achieved within one week. This should not be delayed otherwise the PM will be in breach of contract.
The outstanding work should be notified as a Defect either before or after Completion has been certified, probably before but some might argue that incomplete work is not a Defect, I beg to differ on that as that part of the works is clear not in accordance with the Scope therefore of constitutes a Defect under 11.2(6) 1st bullet.
You are correct that upon certification of Completion of the whole of the works one half of retention is released (X16), so the PM must certify a payment (excluding the work which has not been completed) and that payment should be paid by the final date for payment unless a notice to pay less is issued by the Client.
You are also correct that the defect correction period begins at Completion, there is no period imposed prior to Completion it is left to the Contractor to do so when practicable. Therefore, whatever period is stated in CD1 section 4 begins when Completion has been certified and the Contractor is then obliged to correct all Defects notified before Completion within the period stated - see clauses 44.1 and 44.2.
If the Contractor does not correct a Defect before the end of the defect correction period the PM assesses the cost to the Client of other people correcting the Defect and the Contractor pays the amount to the Client - see clause 46.1. Clause 46.1 allows for the recovery of consequential loss as a result of a breach of contract by the Contractor and it is unlimited unless X18 is in the contract. The cost can include all costs associated with procuring other people, including management costs, etc.
If Completion is certified the Contractor is then obliged to correct the Defects, if they don’t then the PM assesses the cost to the Client and this is paid by the Contractor (i.e. deducted) in the next certificate. Look carefully at the defect correction period, if it falls within the period before the final date for payment following Completion then the Client might have time to issue a notice to pay less against the notice of payment (i.e. the PMs certificate) but any notice to pay less must be issued not less than 7 days before the final date for payment - check the Z clauses to see if any of the above has been changed.
If there is not time to issue a pay less notice or deduct monies from the payment at Completion, the PM will issue and will continue to issue payment certificates after Completion at each assessment date until the issue of the Defect Certificate at the defects date (check Cd1 section 4; typically it is 52 weeks from Completion of the whole of the works), therefore the next certificate immediately following the payment at Completion can assess the amount to be paid by the Contractor and that amount may be withheld against the remaining retention. If there is insufficient money in the retention pot, the PM’s certificate will be a negative, i.e. an amount to be paid by the Contractor to the Client by the final date for payment, unless the Contractor issues a notice to pay less within the timescales. In the latter case, a dispute will exist and the Client can refer a dispute through the appropriate dispute resolution procedures in the contract.
Final thought; I would not omit the work from the Scope as this will only allow for a negative compensation event and would not allow the Client to recover consequential loss resulting from the Contractor’s breach.
Hope that helps and happy to discuss.
Steve Brown