Communique Feb 2018

Completion Certificates

Alas, there are some issues which come up in claims over and over again, and completion statements is one of them. Here, we are not considering the certificates and statements called up by the SCC or NZS contracts for construction: in multi-dwelling projects, it is common for the sale and purchase agreement to require the architect to sign-off on “completion” (whatever that means). It is less common for that requirement to be written into the architect’s terms of engagement. We have seen the same issue in funding arrangements for design-build, commercial, and institutional projects.Generally, the architect has a contract for service with the principal; the architect is not a party to the sale and purchase (or funding) agreement. If people (buyer/seller/funder) make contracts reliant on the co-operation of others (eg the architect) not party to their contract, then they do so at their own risk. Their contract cannot be binding on the architect. It creates no obligation on the architect to be bound by what is – in effect – an attempt to unilaterally alter the architect’s terms of engagement. If the co-operation of the architect is required, then it should carry a price which reflects the additional risk and tasks taken on.So much for the theory! All too often the unfortunate reality is that architects are being asked to sign these things for no additional fee AND on the unwritten understanding that if they don't, their outstanding fees will not be paid, and/or 'future work' is suggested as going elsewhere, and/or they are criticized for not being a “team player”.Quite apart from the commercial reasons why an architect may or may not sign such a completion statement, there are risk management reasons to be cautious. Here, it is necessary to consider the differences in the purpose of the design/construction contract versus the sale and purchase (or funding) contract. A sale and purchase contract will be focussed on fitness for purpose: surely the design addressed fitness for purpose long before the construction, the construction was required to follow the design, and the architect’s role during construction (if any) was solely in relation to the performance of that contract. Why on earth would an architect attest to fitness for purpose on completion other than in relation to the construction contract, and consistent with the level of involvement required of the architect during construction as defined by the terms of engagement?Over the years we have seen many attempts to issue “limited” completion statements. And many which have backfired. It seems that any limited completion certificate is open to challenge by an adequately funded (or perverse) claimant. Indeed, many successful claims and expensive settlements have had as their crucial evidence, the architect’s post-construction-completion certificate.So we are going to be very simple and non-specific in our recommendations:

• If you have done the site observation tasks on the building contract as required by your terms of engagement, and at a late stage are asked to add some sort of completion statement to satisfy the requirements of another contract, then, in addition to paying attention to the attendant risks of that task, you should include somewhere in that statement that your declaration is made “to the extent that it is consistent with and does not alter the Architect’s role and responsibilities as defined in the terms of engagement with the Principal in relation to the construction contract between the Principal and the Contractor” or similar.
• At the engagement phase of the project, give thought to the need to address the prospect that a completion statement as discussed above may later be required, and deal with it in your terms of engagement and fees.
• If you are not involved in observation during the construction, you cannot issue a statement in relation to completion. Not only are you taking on a huge risk in making such a statement – as it may be interpreted as a warranty - but you do not have the information to do so and could stand accused of making a false or misleading statement. Just say NO.