Is it practicable to give a contract administrator the power to instruct an acceleration of the completion date of the contract? Simplistically, most employers see acceleration as the counterpart of postponement, and believe they should have power to instruct both if they so wish. More specifically, where the works have already been delayed and the contractor is entitled to extensions of time, the employer often wants an acceleration to achieve the original completion date, frequently to enable Christmas opening or to ensure prompt rent commencement.
But most standard forms do not allow either the employer or the contract administrator to instruct acceleration: indeed, most do not deal with acceleration at all.
Of the JCT forms, only the management contract mentions acceleration. It enables the employer to ask the architect to request the management contractor to accelerate. In response, the management contractor may either object or price the request. The employer can then decide whether it wishes to proceed. In other words, the mechanism depends on the contractor’s agreement.
The ICE forms do not ignore acceleration: they permit the engineer to ask the contractor to expedite progress, but only where it is already culpable for a delay. Acceleration of the completion date can otherwise only be required with the contractor’s express agreement, and then on such special payment terms as may be agreed.
Even the otherwise bold NEC suite of documentation leaves acceleration as “an agreement to agree”. The project manager may instruct the contractor to submit a quotation. The contractor must respond or give its reasons for not doing so, but ultimately the acceleration only proceeds if the project manager accepts the quotation.
Why this timidity? The contract will require the contractor to complete by the stipulated date. The contractor will have been planned and priced on this basis. Sometimes an acceleration will be physically impossible. Sometimes it may require resources that are unavailable or deployed elsewhere. Sometimes it will be wholly uneconomic. Some of these factors can be objectively assessed. Some depend on the particular circumstances of the contractor. Because of this element of subjectivity, giving the contract administrator the power to instruct, subject to the contractor’s right of reasonable objection, is unlikely to work satisfactorily.
- Refusal to grant extension of time is not an instruction to accelerate
- Contractors should complete to the programme they believe correct
- Acceleration has commercial risk for both sides
But that is not to say that acceleration can never work. It is relatively common and often very helpful to both parties to agree an interim settlement of delay claims, coupled with an additional payment during the course of the project. Where the project is in delay and there are disputed extensions of time, there is much to be said for wiping the slate clean, re-confirming completion dates, settling all claims on an interim basis and proceeding afresh.
But what if agreement is impossible? If an architect rejects an extension of time application, the contractor’s knee-jerk response is to claim that the rejection is wrongful, and should be regarded as a “deemed” instruction to accelerate – in other words, the architects has implicitly instructed the contractor to accelerate.
Does this argument have any legal validity? The answer to that must be no: since there is no power to instruct an acceleration in the first place – either at all, or only if both parties agree to it – the refusal to grant an extension of time cannot be a deemed instruction to accelerate.
If the extension was incorrectly refused, the contractor’s remedy is to challenge the decision through arbitration or litigation. If the contractor is confident of its position, it will complete to the programme that it believes correct even though the architects has refused to extend to that date and challenge the decision to refuse an extension at a later date. It cannot safely accelerate to meet the original finish date and expect to recover the associated costs with any confidence.
On the other hand, an employer that over-enthusiastically requires a contractor to complete by a stipulated date whatever that contractor’s true contractual obligations may create a collateral agreement for acceleration, entitling the contractor to payment on the basis of its reasonable costs plus profit. It will not necessarily matter whether the acceleration was successful: the obligation to pay costs may still arise.
Postscript
Ann Minogue is a partner in solicitor Cameron McKenna.
