Acceleration measures on construction contracts

Alastair Gray, senior director for Trett Consulting, explains the ins and outs of acceleration measures.

Alastair Gray
Alastair Gray

Alastair Gray, senior director for Trett Consulting, explains the ins and outs of acceleration measures.

There are issues which often cause delays to projects, such as suspensions to the works and variations to the scope of works by clients, for which the contractor is typically entitled to an extension of time and associated additional costs.

However, the client has often already committed to the on time completion of the project so that late completion is not an option and acceleration and mitigation measures to recover the delay are required.

In such instances both the client and the contractor should be wary of not only the cost of acceleration, but the other various factors which tend to subject acceleration measures to diminishing returns upon investment.

It is better for acceleration agreements to be made prior to the implementation of acceleration measures. This is because the parties often have widely differing thoughts as to cost, benefit and liability.

The client may insist upon the completion date remaining fixed and any liquidated damages clauses remaining in force, thus placing the risk of the effectiveness of the measures with the contractor, whereas the contractor may be willing to implement acceleration measures at the client's instruction, but with no warranty of the effectiveness of the measures in recovering the delay.
 
The parties should identify the various options open to them to accelerate the progress of the works.

These will include the more obvious items such as working overtime and increasing the size of the workforce, as well as more project specific possibilities such as the procurement of additional plant or implementation of alternative 'faster' construction methods such as precast in lieu of cast in-situ concrete.

Each possibility can be assessed in terms of cost/benefit, so that the most effective solutions can be decided upon.

When a project is in delay, it may be that both parties are responsible for a portion of the overall delay. In order for an agreement to be reached regarding acceleration measures and the parties' respective responsibilities for paying for them, the responsibility for the delays needs to be established.

This will require an honest evaluation of the extent of the delay and identification of mitigation measures (i.e. measures which the contractor and / or the client could implement to recover delays without incurring any additional cost).

Of course whilst negotiations are ongoing, the clock is ticking and time is running out. Correspondingly, the options open to the parties to recover the delay are also diminishing.

For example, additional plant may have a considerable lead time for procurement, so that if the decision to procure it is not made in time, that particular option is lost.

As a result, it pays for the parties to be proactive in establishing possible solutions and perhaps for the contractor to indicate deadlines for the implementation / instruction of certain options, after which they are no longer viable.

The most common acceleration measures are the introduction / increase of overtime, and/or the increase in size of the workforce. Each is problematic.

It is common for overtime rates to be 1.5 to 2 times the regular rates for construction workers. If the contractor opts to increase the number of workers on site, there is a risk of congestion.

This is especially the case within restricted sites where a number of different trades might be working in the same area, leading to downtime of workers whilst they wait for other trades to finish their works, or whilst they find an area where they have reasonable access to carry out their works.

An increase in the number of hours per day and / or days per week will lead to fatigue and lower productivity.

Overtime working therefore usually means higher rates being paid for the least productive hours of the working day.

Similarly, whilst the lure of overtime money attracts workers to the concept of working every day of the week and protracted hours, such a harsh work regime takes its toll on a workforce both physically and mentally.

Loss of productivity due to absenteeism and sick leave is likely to increase as overtime working becomes more of a regular feature.

Both parties should also be mindful that further delay events may occur subsequent to the implementation of acceleration measures. Unless otherwise agreed, the contract provisions regarding delay, extensions of time and additional costs remain operative.

To conclude, both parties need to be aware that acceleration is expensive and that productivity is often adversely affected by the implementation of the typical acceleration measures.

A realistic cost/benefit analysis should be carried out prior to the implementation of any measures, and the effect upon the relevant provisions of the contract need to be established. If possible, prior agreement of the cost and benefit should be made.

If you would like to write for Construction Week in this column, please email angela.giuffrida@itp.com

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