What does the term "substantial completion" refer to in construction?

The term "substantial completion" refers to the stage when a construction project is sufficiently complete in accordance with the contract, allowing the owner to occupy or utilize the project for its intended purpose. This milestone signifies that most of the work has been finished, enabling the owner to begin using the space, although some minor tasks or corrections may still be pending.

Substantial completion is a critical point in the construction timeline because it often marks the beginning of the warranty period and triggers other contractual obligations, such as the release of retained funds. It is not synonymous with final completion, where all the work is fully finished, including all inspections and approvals. Understanding this stage is essential for both contractors and clients, as it impacts the project's financial and legal aspects.