Vous êtes sur la page 1sur 3

CONTRACTOR'S LEGAL GUIDANCE NOTE F AUTUMN 2009 EDITION

ACCELERATION

Introduction This edition of the Contractor's Legal Guidance Note is the first in a series exploring the phenomenon of "acceleration" in building, engineering and other similar projects. In this edition, we will look at the basic concepts from the perspective of the contractor who is directly contracting with the developer. What is acceleration? What categories of acceleration exist? And what are the basic ingredients of a legal entitlement to a reimbursement for costs incurred in the effort to accelerate? Subsequent editions of the Contractor's Legal Guidance Note will focus in on the issues concerning the two main types of acceleration, the importance of contractual drafting language and some basic legal issues concerning the quantification of the right to reimbursement for acceleration costs. What is Acceleration? Acceleration is the execution of work more quickly than previously anticipated. It usually occurs in one of two forms: first, it occurs when one is required to accomplish the same work within an intentionally shorter period. Secondly, it occurs when one is required to accomplish increased, additional or delayed work within the same period, that is, without the benefit of a time extension (EOT). The first manifestation of acceleration is the most easily understood, recognised and accepted. The second aspect is more complicated and is commonly the subject of disputes. The temporal implications of increased, additional, or delayed work are rarely acknowledged by those who order it. Added to this, the effects of acceleration on a contractor's costs are often be hard to understand and difficult to calculate. What categories of acceleration exist? When a developer either recognises the effects of delays on the construction programme and requires the contractor to accelerate the remaining work (as depicted in Scenario "A" in Figure 1 below), or intentionally shortens the contract duration without the occurrence of any delays (as depicted in Scenario "B" in Figure 1 below), the acceleration is said to have been "express" or "directed"

Scenario A

Scenario B

Figure 1 - basic acceleration types


1 of 3

Directed acceleration is seldom disputed. Because it is generally recognised that a contractor is entitled to its full contract term to complete, costs of acceleration carried out pursuant to a direction of the developer which shortens the available term are usually negotiated and agreed before the acceleration begins (see e.g. Sub-Clause 13.2 (Value Engineering) of the FIDIC 1999 Red Book). Similarly, acceleration directed to be carried out to overcome delay for which the contractor is legally responsible (culpable delay), is generally accepted by the contractor when the contractor acknowledges responsibility for the delays (see below). The contractor may not be able to recover its acceleration costs if the delays were the contractor's responsibility. The contractor accelerates to avoid the possibility of being ruled in breach of the contract by completing the work late if it is later determined that the contractor was not due any additional time. Constructive acceleration, which is the most commonly disputed form of acceleration, is said to occur when the contractor claims an EOT (for whatever valid reason) but the developer denies that request and affirmatively requires completion within the existing contract term, and it is later determined and agreed that the contractor was entitled to the EOT. What are the basic requirements for acceleration claims? According to common law principles, and as a matter of logic, there are two fundamental legal requirements that, absent the (unlikely) presence of express provisions to the contrary, must be met before the recovery for costs of acceleration can be even considered: first, there must be a fixed period within which the work must be completed. If neither party to the contract cares when it is completed, then what justification is there for speeding up? Most modern contracts stipulate such a fixed period. Secondly, the contract must allow for an EOT. If no EOT is permitted then the contractor must include any acceleration costs in its bid. The obligation to accelerate often arises from an express power bestowed upon the developer by provisions in the contract. However, absent contractor's culpable delay, this provision does not allow directed acceleration in circumstances where the developer simply wishes to use the project prior to the contract completion date. Whilst there may be "value engineering" provisions which accommodate proposals for expedited completion (as referred to above), commonly, these provisions grant the contractor a right, not an obligation, to do so. Also, many contracts require contractors to accelerate at the developer's direction or to overcome contractor's culpable delay for example, Sub-Clause 8.6 of the FIDIC 1999 Red Book. If a contractor is in culpable delay and the developer validly exercises a right to require acceleration, generally, the contractor will not be entitled to recover its resulting costs necessary to get the works back on schedule. An exception may arise where the contractor is not then given a reasonable opportunity to perform to an accelerated schedule, such as where permission to work outside certain working hours is unreasonably withheld or delayed. Further, some contracts contain general "default curing" provisions, which in effect empower the developer to direct acceleration where the contractor is in culpable delay. Under such provisions, the contractor who is directed (in accordance with the relevant power) to accelerate is legally obligated to do so. In the absence of such an express power, it seems there is no duty to obey any order to accelerate. The contractor may refuse any request by the developer to accelerate. Generally, a limitation of the time within which the contractor is to do the work means not only that he is to do it within that time, but it means also that he is to have that time within which to do it. Indeed, in some circumstances, an order to accelerate may be a breach of contract. So, without a clause permitting directed acceleration, before the contractor becomes obligated to accelerate, the developer must negotiate a new agreement satisfactory to the contractor which provides for payment to the contractor for the additional performance costs caused by the acceleration. That new agreement need not be negotiated comprehensively or formally perfected in order for it to establish the contractor's right to payment if the essential elements of a contract (including the authority of the person making the request on behalf of the developer) are otherwise present in the request to accelerate and the contractor's response to that request.

2 of 3

As a general rule, we recommend that contractors be careful to ensure that all contractual elements are present before accelerating and, to that end, that they take legal advice. A contractor who is simply being ordered or harassed to accelerate should, again as a general "rule of thumb", try to make direct contact with the developer and negotiate a special agreement, or at least notify the developer directly that he is implementing the developer's wishes on the basis that he will be paid extra for going beyond his contract, although that may not in itself guarantee that the contractor will be held entitled to extra payments for accelerating. Again, in the absence of such an express power, as mentioned above, under the concept of constructive acceleration, by failing to grant a due EOT, a developer may in effect direct acceleration, if the contractor chooses, reasonably, to accelerate rather than risk a dispute over responsibility for delayed completion of the works. The overall validity of, and legal elements for, a claim based on "constructive acceleration" are not straight forward, and we recommend that appropriate legal advice be taken before the decision to accelerate in the absence of both an EOT when one was claimed and an express request by the developer for acceleration. As mentioned above, subsequent editions of the Contractor's Legal Guidance Note will focus in on the issues concerning both directed and constructive acceleration Conclusion The phenomenon of acceleration, whilst beneficial for the developer, can affect a contractor's costs in a variety of ways. It can lead to additional costs, such as: additional labour and/or equipment hire costs (arising from reduced efficiency of the expanded labour force and/or supplied equipment), additional delivery charges for material and equipment required at the site outside of normal work hours, costs of additional site facilities, and additional costs from an advancing of the date of delivery of manufactured elements.

Acceleration can also lead to benefits for the contractor, such as when regular progress of the site operations would inevitably result in liability to the developer arising from the delayed completion of the works. When given a choice to accelerate or not to accelerate, careful and deliberate evaluation of the pros and cons of acceleration in the particular case is called for. At times, contractors do not appreciate that they face that choice, and the accelerated effort is almost voluntary. This may be because the parties have adopted an "engineering before legal" approach, as is so often the case with Japanese project management. Or it may be premised on an assumption by the contractor that he will face liability for the full extent of the inevitable delayed completion. This assumption often stems from a wrong understanding of the contractor's entitlement to an EOT in the particular case. At the very least it is an assumption that should always be tested and validated before a decision is taken to accelerate.

This bulletin does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered

Pinsent Masons 2009

3 of 3

Vous aimerez peut-être aussi