What happens if a construction project is substantially complete but still has remaining punch list items?

In scenarios where a construction project reaches substantial completion, it indicates that the project is sufficiently finished for the owner to occupy or utilize the work for its intended purpose. However, if there are still outstanding punch list items — minor items or repairs that need to be completed — the responsibility typically falls on the contractor to address those issues.

At this stage, the contractor remains obligated to complete the work as outlined in the contract, which includes rectifying any deficiencies identified in the punch list. Although the project may be deemed substantially complete, the formal acceptance of the project and the issuance of the Certificate of Substantial Completion are contingent upon the contractor resolving these items. This ensures that the quality and standards of the project are upheld before the project is fully accepted by the owner.

In contrast, the other options don't align with standard construction practices regarding substantial completion. A new contract isn't necessary merely because punch list items remain; instead, the existing contract governs the resolution of those items. Responsibility for completing remaining work does not shift to the owner at this stage, as any uncompleted punch list items are still the contractor’s responsibility. Payment to subcontractors isn't automatically released at substantial completion if work remains incomplete; financial terms related to retention and completion often require that all punch list items