Construction projects: contractual and non-contractual acceleration

Acceleration is defined by the Society of Construction Law Delay & Disruption Protocol (2nd edition), February 2017, as: "The application of additional resources or alternative construction sequences or methodologies seeking to achieve the planned scope of works in a shorter time than planned or execution of additional scope of work within the original planned duration."

Acceleration can arise either through the employer exercising an existing contractual right to require accelerated completion, or by the employer and contractor entering into an agreement to accelerate, which sits alongside the existing construction contract, and serves to vary its terms.

When acceleration occurs, it is critical for parties to understand what additional responsibilities and risks they are taking on and what entitlement to additional payment the contractor might have. Recording all of these points in a separate agreement between the parties is important.

In an environment where there is pressure on supply chains and resources are often not readily available, a contractor may think twice before agreeing to accelerate. However, it is vital to understand the original contract terms and how they might apply to the particular circumstances.

Acceleration should not be confused with a contractor taking steps to finish earlier in circumstances where a project is running late because of that contractor’s culpable delay. Efforts to finish earlier in these circumstances – and thereby avoid liability for delay damages – are more likely to be characterised as mitigation than acceleration.

Acceleration under a contractual provision

Where an employer instructs a contractor to accelerate under an agreed contractual provision, the basis for the contractor to be paid costs associated with that acceleration might already be identified in that provision. These additional costs are usually agreed by the employer accepting a quotation from the contractor to accelerate, followed by the issue of a formal instruction to accelerate. For example, a contractor might be paid its acceleration costs on a lump sum basis or on a cost reimbursable basis.

Contracts also ought to identify how further delay in a period of acceleration – whether culpable or excusable – is to be addressed and what happens if, for whatever reason, the accelerated completion date is missed. If there are deficiencies in the contractually agreed process, it may be that a separate acceleration agreement is needed to address these points.

What if the contract does not provide for acceleration?

If the construction contract does not provide for acceleration, but the contractor and employer nevertheless agree that accelerative measures should be taken, the commercial terms on which acceleration is to take place ought to be recorded in a supplemental agreement before those measures are put into effect. This agreement will act as a variation to the original construction contract and so any provisions in the existing contract which regulate how the construction contract is to be varied need to be properly addressed.

Standard form contracts

Under JCT contracts, an acceleration quotation is necessary for the adjustment or variation of, for example, the completion date and the final sum. Such quotations may, depending upon the standard form, involve a timetable for any revised proposals and acceptance or non-acceptance of the quotation.

Under NEC contracts, the contractor and project manager may propose acceleration to the other, again with the provision of a quotation. The provision of the quotation results in a timetable for the acceptance of the acceleration and acceptance of a revised programme.

What acceleration measures might be employed?

A variety of measures might be taken for the purposes of accelerating progress or recovering delay. Potential options may include:

• increasing labour resources, including introducing longer or additional shifts in the form of evening or weekend working;
• increasing the quantity of available plant and equipment;
• increasing the allocation of head office or other administrative or supervisory resources;
• adopting alternative construction methods, such as off-site manufacturing;
• re-sequencing or compressing activities in the programme;
• changing the design or specification of the works;
• increasing quality control resource and enhancing quality control procedures; or
• adding new suppliers to the existing supply chain.

For these measures to work effectively, the contractor might require certain commitments or assurances from the employer. For example, the employer might be required to issue design information or approve designs by an earlier date, perhaps subject to the contractor providing regular and reliable ‘look-ahead’ forecasts which identify when approved design information is required.

Constructive acceleration

If a contractor is delayed for reasons which it argues are not its responsibility, but the employer disagrees and refuses to award an extension of time or instruct acceleration, the contractor can have a tough decision to make: whether to make a formal claim for an extension of time that the employer has already refused; or to accelerate, at its own cost, to avoid or mitigate its potential exposure to liquidated damages. The latter scenario is described as “constructive acceleration”.

Claims for constructive acceleration have yet to succeed in the courts in England and Wales. Here, the accepted notion is that where the contract provides for acceleration, payment for acceleration should be based on the terms of the contract and where there are no acceleration provisions, contractors may risk accelerating without being able to recover the costs of doing so. However, courts in other Commonwealth jurisdictions have been more sympathetic to this line of argument.

An Australian case, V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd, highlighted the potential for a contractor to claim acceleration costs where it can establish a breach of contract by the employer in not awarding an extension of time in circumstances where it was obliged to do so.

Unless there is a shift in approach in the courts of England and Wales, contractors may wish to seek an early decision through adjudication as to whether they are entitled to an extension of time.

If this is not possible, the contractor could consider documenting the basis of the steps it intends to take, explaining why the employer's conduct is such that it has to accelerate. The contractor could also look to prepare alternative programmes to show the effect of accelerative measures. Such steps may assist the contractor to recover its acceleration costs if it is able to demonstrate that the causes of delay are the employer's responsibility, either as loss and expense or as damages for breach of contract. Taking those steps does not guarantee a contractor that it will overcome the problems of 'constructive acceleration', but they may be useful in commercial dialogue and in formal proceedings.