A tool for successful monitoring of a project’s progress, or an unnecessary burden?
A Delay Analyst’s point of view
The use of sectional completion milestones in complex construction contracts has become increasingly common. Are such milestones useful to better monitor and control a project’s progress, or are they simply an unnecessary administrative burden?
Author: Rola Sabbah, Senior Consultant, Dubai, UAE
What is Sectional Completion?
Sectional completion is a contractual provision allowing a project to have multiple completion dates for separate sections of the project. For example, if a project consists of several different buildings in adjacent areas, each building in each area can be defined as a separate section with its own completion date, i.e., a sectional completion milestone. These sectional completion milestones are usually reflected in the contract and then in the project’s approved programme within the overall completion date for the project.
Careful use of sectional completion milestones is necessary to avoid potentially turning a contractual obligation and useful project control tool into a source of unplanned complexity...
What are the benefits of Sectional Completion Milestones?
The benefit of sectional completion milestones for an employer is for it to be able to take over completed stand-alone sections of the project and use that section without having to wait for the full completion of the works. The benefit for contractors is being able to plan and monitor the progress of each section separately and target actions to mitigate any delays to a specific section. The timely completion and handing over of sections also reduces the insurance liability for the contractor and the overall liability for any delay damages or penalties as typically these are assigned for each section.
But...what happens when Sectional Completion Milestones are delayed?
Most contracts with sectional completion milestones include provisions for extensions of time for each section and allow for the imposition of delay damages or penalties to each sectional completion milestone. From a delay analyst’s perspective, analysing delays for each milestone can be challenging as the critical path for each milestone must be analysed separately. In an ideal scenario, the critical paths for different milestones are independent of each other, simplifying the analysis.
However, often the sections are highly interdependent leading to complex relationships between them which complicates the delay analysis. For example, a project involving a single building may define several sectional completion milestones by floors. While the structure can be progressed on a floor-by-floor basis, MEP installations often depend on full-system integration across the entire building. In these circumstances, identifying and analysing the critical path for each milestone and the progress and delays against each sectional completion milestone can be particularly challenging.
On projects with numerous sectional completion milestones, analysis of the progress and delays to an individual milestone may require the modification of relationships to reflect the actual sequence of work, adjusting the critical path. Such changes can affect the critical path of other sectional completion milestones, resulting in a cycle of revisions to establish the proper critical path for each sectional completion milestone.
In relation to time-related costs, it is usually very challenging for contractors to allocate costs per sectional completion milestone(s) rather than allocating the costs to the overall completion date of the project. This can involve the assessment and allocation of resources to individual sectional completion milestones, which is complex and can present difficulties in substantiation.
Conclusion
Sectional completion milestones can be beneficial to all parties involved in a construction project. However, their effectiveness depends significantly on the nature and complexity of the project and the level of interlinked relationships between them. Careful use of sectional completion milestones is necessary to avoid potentially turning a contractual obligation and useful project control tool into a source of unplanned complexity, especially when assessing the impacts of delays on a project. The use, number, and interdependence of sectional milestones should be carefully planned and managed with a balanced approach that promotes clarity and flexibility.
For any project support on this matter or similar, do not hesitate to reach out to Rola directly: rola.sabbah@diales.com
This article was originally written for issue 28 of the Diales Digest. You can view the publication here: www.diales.com/diales-digest-issue-28
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