Defects Liability Period

The Defects Liability Period (DLP) is the defined period following practical completion of construction or civil works during which the contractor is contractually obligated to return to site and remedy any defects that appear in the works, caused by non-conforming materials or workmanship, at its own expense.

What is a Defects Liability Period?

The DLP is a fundamental concept in FIDIC-based contracts and in the standard conditions recommended by all major multilateral development banks for civil and building works. It typically runs for 12 months from the date of practical completion, though contracts for complex mechanical or electrical installations, specialised structures, or high-risk works sometimes specify 24 months. During this period the employer issues a defects notification when faults are identified, and the contractor is required to remedy them within a reasonable time. At the end of the DLP, the engineer inspects the works and issues a Defects Completion Certificate (or Performance Certificate under FIDIC 2017), confirming that all known defects have been remedied.

Only after the Defects Completion Certificate is issued does the contractor's liability for defects arising from its own workmanship expire, and the retention money held throughout the DLP is released. The DLP does not limit the contractor's broader legal liability for latent defects that arise after the certificate; in most jurisdictions statutory liability for latent structural defects continues for 10 to 12 years.

The warranty-period used in supply contracts and the DLP used in construction contracts are functionally equivalent, though the procedural mechanics differ between contract forms.

Why a Defects Liability Period matters for bidders

The DLP has direct financial consequences. The contractor must maintain a workforce or sub-contractor capacity to respond to defect notifications during this period, even after the main site team has demobilised and moved to other projects. Retention money, typically five percent of the contract price, is held until the end of the DLP, affecting the contractor's working capital. Contractors should also confirm that their construction-all-risk insurance and performance-security remain valid through the DLP, since many standard policies and guarantees lapse at practical completion unless specifically extended.

FAQ

When does the Defects Liability Period start?

The DLP starts from the date of practical completion (or taking over) as certified by the engineer or the employer's representative, which marks the point at which the employer takes possession and beneficial use of the works.

Is the contractor required to remedy all defects notified during the DLP?

The contractor is required to remedy defects that result from non-conforming workmanship or materials. Defects caused by improper operation by the employer, normal wear and tear, or modifications made after handover are the employer's responsibility.

Does retention money cover defects remediation costs?

Retention money is held as security to ensure the contractor fulfils its DLP obligations. If the contractor fails to remedy notified defects, the employer may use the retained funds to hire a third party to do so, deducting the cost from the retention.