Contract documents

November 18, 2022

Substantial Completion Doesn’t Apply to Maintenance Contracts 

In construction contracts, there are clear milestones for completion. One of the most critical is substantial completion, which marks the point when the project is sufficiently finished for the owner to occupy or use the work. Substantial completion triggers key events, such as: 

• The release of retainage funds to the contractor 

• The start of warranty periods and claims limitations 

• The transfer of certain responsibilities from the contractor to the owner 

Substantial completion is usually certified by the project architect after a detailed inspection, making it a significant milestone in construction projects. 

Once substantial completion is reached, contractors move toward final completion, which means the project is entirely finished, and the contractor receives full payment and releases their lien rights on the property. 

However, this two-step process doesn’t work well for maintenance contracts, which don’t include such milestones. Maintenance work, by nature, involves smaller tasks with flexible completion points, making the rigid structure of a construction contract unsuitable. 

How Maintenance Contracts Differ in Completion Milestones 

Maintenance contracts are generally more straightforward than construction contracts. AIA Document F201-2023, titled Work Order for As-Needed Maintenance Work, provides a clear example of how these contracts are structured: 

• The contract starts on a specific date and includes an end date, but these dates can be adjusted as needed. 

• The timeline is essential, and the work must be completed by the agreed date. 

In contrast, ongoing maintenance contracts often don’t define a specific completion point. These contracts require regular services performed on a weekly or monthly basis, and their terms typically span a year or longer. 

For example, AIA Document F202-2023, titled Work Order for Ongoing Maintenance Work, specifies: 

• Maintenance work starts on a given date, with a contract term typically lasting one year. 

• The term may be extended by written agreement, and if it’s not, it automatically continues on a month-to-month basis. 

These contracts are flexible, offering ongoing service rather than defining a specific moment of completion. 

Why Using a Construction Contract for Maintenance Work is Unworkable 

Given the differences in how these contracts are structured, it’s often impractical to adapt a construction contract for maintenance work. The amount of redaction required to remove the substantial completion provisions makes it cumbersome and inefficient. Additionally, the complexities and risks tied to substantial completion do not align with the ongoing nature of maintenance services. 

Maintenance Work Contracts Require Their Own Terms 

In summary, using a construction contract to hire a maintenance contractor is not only confusing but also unnecessary. Maintenance contracts have their own set of expectations and timelines, which are better suited to the nature of regular, ongoing work. It’s more effective to use specific maintenance work agreements like AIA Document F201-2023 and F202-2023 for these projects, which provide clear terms and flexibility without the rigid structure of a construction contract. 

Final Thoughts 

When managing maintenance contracts, it’s crucial to choose the correct type of agreement to avoid confusion. Construction contracts, with their focus on substantial completion and milestone payments, are not suited for maintenance contractors. Instead, opt for maintenance-specific contracts that provide clarity and flexibility. 

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.