FAQ.16

Question:

The contractor applied for substantial performance and I declined because the total certified value of work is less than 97% that the Construction Act (CA) prescribes. The contractor contests that since the space is occupied they qualify for substantial performance. Is the 97%, 3:2:1 calculation rule of the CA valid in all circumstances?

Answer:

There are two requirements to achieve substantial performance according to the Construction Act of Ontario (some other provinces differ).

1) Is the 3:2:1 % calculation and

2) is “ready for the use intended” – which is most often, but not always, occupancy.

Simply because a space has been occupied does not mean that it automatically achieves substantial performance as defined by the CA.

It should be noted that granting ‘occupancy’ is under the auspices of municipalities. Although a building or inspection department may ask for a sign-off letter from the architect (and engineers), it is the municipality not the architect which is authorized and responsible to grant occupancy of a building.

Members should be aware of the distinction between substantially complete and substantially performed. Refer to the Management of the Project peer article “Substantial Completion vs. Substantial Performance - What’s the Difference?”