Ken Tracey advises on the tricky and potentially costly subject of contract acceleration
Acceleration is costly and should be paid for by the party responsible for delays. In the heat of a rapidly approaching completion date, the root causes of the requirement to accelerate are often ignored as pressure is applied to subcontractors to complete on time.
The result is often chaos and a financial burden on parties, regardless of their responsibilities. It is common for a subcontractor to be drawn into these situations.
The inequitable distribution of costs may start when subcontractors are issued with revised programmes in the form of short-term or completion programmes and then, without question, they work to them.
This similarly applies to requests to increase labour strengths and work overtime. The main contractor or employer is unlikely to inform subcontractors that they are accelerating to mitigate delays attributable to themselves.
Confirmation that the programmes are accepted as a variation must be given in writing. Subcontractors may use their best endeavours as required by the contract, but they do not have a duty to finance acceleration due to the delays of others.
Dissatisfaction with the process may be aggravated if, even with the additional resources, practical completion overruns the completion date. Failure may occur due to a number of factors.
The employment of additional labour resources becomes less effective as the quantity of work remaining decreases. Efficiency tails off due to congestion in working areas, the overlapping of trades and overtime fatigue.
The work is generally won in competition, with time as well as money being scrutinised by the employer, professional team and main contractor, resulting in a programme containing little room for improvement.
So a subcontractor needs to be wary of a process that can leave him with unrecoverable costs and also fail to achieve its objective. His mantra should be, “There is no case for a subcontractor to accelerate at his own cost, except for his own failures.”
Ready to react
It is essential to be aware of the general state of progress on site and the plight of others causing delays, and to react when an instruction to accelerate, however veiled, is given.
There is a duty to serve notice when progress is delayed. The early issue of a notice requesting an extension of time could result in acceleration measures being implemented instead.
This is the time to lay down a firm understanding of the requirements and the means of recompense. An instruction to finish early or to recover lost time would be an attempt by the main contractor or employer to amend the contract, so a clear written agreement on the intentions of the parties is necessary.
Prior to any measures being taken, an accurate assessment of progress to date and any anticipated overrun must be established. Without this information, it would be difficult to measure the effect of acceleration. Record progress to date in writing and obtain the agreement of the other party.
Establish the main contractor’s or employer’s requirements in respect of an end date. Do they wish to:
• Meet the original completion date?
• Reduce delays to meet a revised completion date, or fix an arbitrary date?
When a decision has been made on either option, forge an agreement that covers:
• Payment – this may be a lump sum agreed prior to acceleration or based on historical costs after the event. Keeping and agreeing records as work proceeds is of paramount importance.
• The procedures for accelerating must be agreed. Overtime working may be an option, but in some cases may be restricted to certain hours – for example, not at weekends.
• It is important to establish whether full payment depends on meeting the agreed date. Would the subcontractor be responsible for his own costs if he fails?
• Alternatively, payment may be a bonus only payable if agreed criteria are met.
Most standard forms of contract do not make provisions for acceleration. A notable exception is the JCT Major Projects Form. When required, it may be dealt with by an instruction and valuation made by reference to the pricing of variations rules.
If these procedures are adopted, the cost of acceleration should only be borne by the parties responsible for the delay.
Electrical and Mechanical Contractor
Ken Tracey is a commercial adviser with the ECA