Acceleration is relevant to all construction contracts irrespective of their location or type. In tunnelling the uncertainties into which the project launches are so numerous that invariably the progress is different to that planned. If progress is slow, acceleration is invariably considered as an option by which the team can claw back time lost and not rely on the possibility that conditions further on in the dig will get better and allow a faster rate of progress resulting in completion on time after all.
Acceleration is where the Contractor takes steps, despite a change, to achieve the original completion date or to achieve an earlier completion date than would otherwise be the case. It is an increase in the intensity of the work being carried out with the aim of bringing the job in on time and should not be confused with mitigation, which is simply re-allocation of existing assets in order to minimise cost and delay under the changed conditions on the site. If the Contractor has accelerated, it will want to recover the costs it inevitably occurs in: adopting increased working hours; working weekends; instigating double or triple shifts; or bringing extra equipment or other resources to speed up the work.
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In circumstances where the Employer expressly instructs the Contractor to accelerate and where the need to accelerate does not arise from the Contractor’s own delay, then the right to recover the acceleration costs is relatively straightforward. More difficult but probably more common is the situation where there is no clear instruction to accelerate. This sort of situation may arise where for example the Contractor thinks he has a valid claim for an extension of time and notifies the Employer of this; the Employer (or his Project Manager) refuses or fails to grant an extension of time and the Contractor, rather than risk being wrong and having to pay liquidated damages, decides to accelerate to make up the delay. On the other side of the fence, the Employer may want the Contractor to accelerate, not just to achieve an earlier completion date but to make up delays so that the original completion date can be met. If the Contract is silent on acceleration (as many are) then the Employer will have no right to issue such an instruction and will have to depend upon reaching a side agreement with the Contractor.
The obvious point to be made for the Employer is that it needs an express contractual power to instruct acceleration. This does not exist under the FIDIC forms, however, the NEC Form, at clause 36, expressly entitles the Project Manager to instruct the Contractor to submit a quotation for acceleration to achieve completion before the completion date. The Contractor then submits his quotation, his proposed changes to the prices and a revised programme showing the earlier completion date. However, even the NEC Form only provides for acceleration to achieve an earlier completion and not acceleration to make up delay and achieve the existing completion date. This is probably because the Contract expects the parties to resolve their issues on the hoof and as a result, change the completion date timeously if a time-effective compensation event occurs. In those circumstances, the completion date would move to the right as a result of the Project Manager’s assessment. An instruction to accelerate would then drag the completion date back to the left. Dealing with this issue and others relating to the backlog of compensation events quotation and assessment is one of the key challenges in working under an NEC Form. The NEC Third Edition goes some way to dealing with this by providing that the Contractor’s quotation is accepted unless the Project Manager makes his assessment within ‘the time allowed’ in the Contract Data. The reality is that this element may well be written out where the Employer is alive to the dangers of de-facto acceptance. This renders the Contract vulnerable to a paralysis where the Contractor is issuing numerous compensation event quotations that include changes to the completion date and the Project Manager fails to make its assessment or agree with the quotations in good time. The Project Manager would arguably be acting outside its authority in issuing an acceleration instruction under those circumstances.
Where a contract governed by English Law does not grant the Employer the right to instruct the Contractor to accelerate, but it instructs anyway, the Contractor can probably recover its acceleration costs. As the Employer, in these circumstances has made the request to accelerate, where the Contractor complies it is likely that an implied promise to pay results. Alternatively, a collateral contract has arguably been concluded which would then sit along side the Building Contract and under which payment would be recovered. In both of these situations, it will be open to the parties to agree a price for the acceleration measures, failing which it is likely that the Contractor will be entitled to recover its costs on a quantum meruit basis.
Constructive acceleration
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By GlobalDataWhat happens where the Employer refuses to grant an EoT and the Contractor considers it is obliged to accelerate in order to hit the original completion date? This is ‘Constructive Acceleration’, a principal named in the United States, where if a contractor can prove that a delaying event was one for which it ought to have been awarded an extension of time and the certifier refuses to grant an extension of time either promptly or at all, a contractor may be permitted to claim acceleration costs. In the Case of Fru-Con Construction v United States[1] the Federal Court set out the test in the United States for the recovery of constructive acceleration costs:
“First there must be an excuse for delay. Second, the [employer] must have knowledge of the delay. Third, the [employer] must act in a manner which reasonably can be construed as an order to accelerate. Fourth, the Contractor must give notice to the [employer] that the order amounts to a constructive change. Fifth, the Contractor must actually accelerate and thereby incur added costs.”
The United States Courts permit such claims on the basis of an implied instruction by the Employer to pay the Contractor to accelerate, overcome delays and finish the project by the contractual completion date.
The Australian Courts have considered ‘constructive acceleration’ type issues in the case of Perini Corp v Commonwealth of Australia[2]. There, the certifier refused on a number of occasions to give a decision on the contractor’s application for an extension of time. The contractor accelerated to avoid liquidated damages and was successful in claiming damages for breach of contract on the basis that a term was implied into the contract that (i) the employer would ensure that the certifier performed his duties and (ii) that the employer would not interfere with the performance of the certifier.
In the UK, the texts and authorities do not look on Constructive Acceleration particularly favourably. The SCL Delay and Disruption Protocol for instance suggests:
“Where a Contractor accelerates of its own accord, it is not entitled to compensation. If it accelerates as a result of not receiving the EOT that it considers is due to it, it is not recommended that a claim for so-called constructive acceleration be made. Instead, prior to any acceleration measures, steps should be taken by either party to have the dispute for difference about entitlement to EOT resolved in accordance with the Dispute Resolution procedures applicable to the Contract.”[3]
The conventional position under English law is that the parties have included provisions for EoT in the contract and if the Employer fails to grant an appropriate extension, the dispute resolution provisions should be used to correct such failure.
Crystallising the dispute can be a difficult and time consuming process and depends on the particular contract conditions as to when the Project Manager or Architect is required to make his decision about entitlement. There will be significant commercial pressures on the Contractor if it continues at its normal rate of progress, pays liquidated damages for weeks while the PM makes up its mind and then pays for adjudication or other dispute resolution process on the point if he comes to the wrong decision. These commercial pressures often outweigh the risk of accelerating to bring the job to a timely conclusion in the hope that some allowance for acceleration costs will be made in the final account.
Case histories
Two relatively recent cases are worth mentioning in the context of Constructive Acceleration. In Ascon Contracting Limited v. Alfred McAlpine Construction Isle of Man Limited[4], McAlpine was the main contractor for the erection of a five-storey development on the seafront site in Douglas in the Isle of Man. Ascon was McAlpine’s reinforced concrete sub-contractor responsible for floor slabs, basement perimeter walls and columns between floors. The main contract was itself delayed by about 10 weeks and McAlpine paid substantial liquidated damages to the Employer as a result.
Ascon claimed an extension of time of 39 days, damages and the cost of accelerative measures it claimed to have undertaken. Ascon’s acceleration claim failed on the particular facts of the case, but significantly Judge Hicks in the Technology and Construction Court said that the case based on a “discerned” instruction to accelerate “might be arguable”. The argument raised by Ascon was that by their actions an instruction could be discerned from McAlpine to accelerate in order to avoid delay to the main contract. That failed because the evidence was that McAlpine had been pressing Ascon to make up what McAlpine thought were Ascon’s delays and could not therefore give rise to instruction to accelerate to avoid delays which were not Ascon’s responsibility. As the Judge said:
“Acceleration not required to meet a contractor’s existing obligations is likely to be the result of an instruction from the Employer for which the latter must pay, whereas pressure from the Employer to make good delay caused by the Contractor’s own default is unlikely to be so construed.”
Ascon resulted in speculation that on the right facts, an acceleration claim based not on a written instruction from the Employer might succeed. The case was followed by the decision in Motherwell Bridge v. Micafil Vacuum Technik in 2002[5]. In that case Motherwell brought a claim against Micafil on the basis that it had been delayed by Micafil and that as Micafil had failed to award an extension of time, Motherwell was forced to accelerate the works. Judge Toulmin, again in the Technology and Construction Court, held that Micafil was responsible for the delay that had occurred and that in refusing to grant an extension of time but at the same time insisting on Motherwell progressing the works to achieve a contractual completion date, entitled Motherwell to recover its acceleration costs incurred in trying to achieve that. It is fair to say that the legal basis for the Motherwell decision was not spelt out by the Judge but once he had decided that the delay was indeed Micafil’s responsibility and not Motherwell’s, he appeared content to accept that Motherwell should be reimbursed for its costs for trying to recover that delay.
So the English Courts seem to be suggesting that there are circumstances where the Contractor can recover its acceleration costs even where there has been no express instruction to accelerate and where there is no agreement as to which party is responsible for the delay which is being sought to be made up. That said, given the uncertainty surrounding these two cases on exactly the circumstances which will allow the successful claim for acceleration costs, the best advice for the Contractor remains to seek to get the written instruction to accelerate before undertaking such works. Where that is not possible but where the Contractor decides that nonetheless he will take accelerative measures, he needs to set out clearly beforehand the basis of the steps he is going to take. He must explain what it is about the conduct of the Employer which leaves the Contractor to consider that he is effectively being instructed to accelerate. If it is subsequently established that the causes of delay are the responsibility of the Employer, there is a prospect that the Contractor may be able to recover its costs, either as loss and expense, damages for breach or on the basis on unjust enrichment.
Once the principle of whether acceleration costs can be recovered has been established the Contractor then needs to be able to prove what these costs are. Its chances of success will be greatly enhanced the better the records it has kept. The Contractor will be entitled to recover only the additional costs it has incurred in taking the accelerative steps. As a result, it needs to be able to produce documentary evidence that the costs that he is claiming are indeed additional to those which would have occurred in any event. Also it needs to demonstrate that the costs it is claiming are costs which resulted from the accelerative steps.
Conclusion
From the Contractor’s perspective, where acceleration is in prospect, ensure that you apply for an EoT in good time under the Contract and consider a rapid resolution of the extension of time argument in the event that you can see acceleration looming on the horizon. A sacrifice of one or two days EoT at this stage could save a lot of time and money in the long run. It is also worth attempting to seek agreement that you are being instructed to accelerate and attempt to value the acceleration provisions for the sake of clarity and in order to avoid arguments later on. Finally, if you cannot obtain an instruction from the Employer, give a clear notice of acceleration which includes the reasons why you are accelerating and comments upon the facts of the acceleration including your reasons, the costs and the resources deployed.
From the Employer’s point of view, once again, EoT should be addressed promptly and agreement sought in relation to the value of acceleration if possible. If you do not intend to instruct acceleration then extreme care needs to be taken with written and oral communication as an inadvertent reference to it could result in arguments from the Contractor that it has actually been so instructed. Once again, ensure that good records are maintained so that the additional costs can be traced back to additional resource not instructed.
“From the Contractor’s perspective, where acceleration is a prospect, ensure that you apply for an EoT in good time under the Contract and consider a rapid resolution of the extension of time argument in the event that you can see acceleration loomingRunner
