While communication is always key to a well executed project, there has always been confusion at the tail end. Substantial completion and substantial performance may appear to be interchangeable words associated with a projects closing but have vastly different meanings and project implications.
Substantial completion originates from the Ontario Building code in association with the occupancy permit. Section 1.3.3 Occupancy of Buildings, provide criteria for this term primarily related to Health & Life Safety provisions and systems. This term does not account for any financial aspect associated with the project.
Substantial performance originates from the Construction Lien Act and is incorporated in the CCDC standard contracts. This term is defined by two measures; a sliding percentage of the value of work completed, commonly referred to as the 1.2.3 measure and the suitability of the intended purpose. There is no direct requirement for Health and Life Safety components verification as part of criteria.
It is possible that a project can be substantial complete and not qualify for substantial performance. It can be concluded that in understanding the terminology correctly and applying to the right situations can save time and money.
Credit: Substantial Completion vs. Substantial performance, Allen Humphries OAA