What does "substantial completion" refer to in construction?

"Substantial completion" is a significant milestone in the construction process defined as the stage when a project is sufficiently completed to allow the owner to use it for its intended purpose. This means that, despite some minor tasks or finishing touches possibly remaining, the essential components and functionalities of the project are operational and available for the owner, signifying a level of completion that allows for the beneficial use of the facility.

This definition is critical in construction contracts because it often triggers various contractual obligations, such as the commencement of warranties, certain payment releases, and the start of the maintenance period. Understanding this concept helps contractors and owners navigate the project timeline and responsibilities effectively.

The other potential choices are less accurate in their definitions. Ordering significant materials is part of the preliminary stages of construction and does not reflect completion. Complete finishing and inspection imply the project is fully done, which goes beyond what is recognized as substantial completion. Additionally, the moment when all payments have been made does not designate a state of completion regarding the project’s functionality or usability.