Recouping the high price of expensive slowdowns

Alastair Gray, senior associate director, Trett Consulting, discusses the key principles of handling construction acceleration claims when others are at fault.

ALASTAIR GRAY: Time can cost a lot of money.
ALASTAIR GRAY: Time can cost a lot of money.

Alastair Gray, senior associate director, Trett Consulting, discusses the key principles of handling construction acceleration claims when others are at fault.

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 for the completion date and associated additional costs.

This is all fine, assuming that the clients' representative or engineer acknowledges the full extent of the delay and grants the extension in a timely manner allowing the contractor to plan the remaining works accordingly.

However, this is often not the case, as the engineer may incorrectly conclude that no time extension is due, or even refuse to acknowledge a contractor's clear entitlement.

In such events the contractor is left in a very awkward position. If the contractor does not accelerate the works then the project will be delayed, in spite of the contractor's best efforts to mitigate the delay (to recover the delay as far as possible without spending extra money).

In such a situation the contractor may be charged liquidated damages under the contract. Alternatively, if acceleration measures are implemented, recovery of costs from the client is far from guaranteed.

Acceleration to recover a delay for which the contractor should have been granted an extension of time under the contract, but wasn't, is commonly known as ‘constructive acceleration'. This is a concept which originated in the USA.

Whilst legal precedent of other jurisdictions would not provide precedence in any legal proceedings in the Middle East, there are certain key principles established which need to be met in other countries for such a claim to succeed, which a contractor would be wise to ensure compliance with, in order to increase his chances of successfully claiming for constructive acceleration.

1. There must be excusable delay (a delay for which the employer is responsible).

In the event that this is not achieved, there is no basis of claim.

2. Notice provisions must have been complied with.

Without the notice, the client could argue that he was denied the opportunity to rectify the situation which led to the alleged acceleration.

Furthermore, most Middle East contracts make compliance with the notice provisions a condition precedent to entitlement to an extension of time, so if the right to an extension is lost, the delay is the contractor's responsibility.

3. The request for extension of time must have been refused or deferred.

It stands to reason that if the extension of time claim is successful then there is no need to accelerate in respect of that particular delay.

However, it is worth noting that deferral of granting an extension often has a similar effect upon the contractor to a straight refusal. Until an extension is granted, the contractor is bound to the existing date for completion.

Therefore, deferral may similarly pressure the contractor into constructive acceleration in the same way that an incorrect refusal of a valid extension of time claim might.

4. A demand for completion by the original completion date must be demonstrated.

The order for completion on time may be in the form of coercion, correspondence, minutes of meetings or similar.

If the engineer has wrongfully refused a valid extension of time claim, there will usually be correspondence reminding the contractor of the existing date for practical completion, that the date must be met and of the consequences of failing to do so.

5. There must be acceleration steps and costs.

Of course if the contractor is able to complete on time without incurring any additional costs, then he should do so. For example, the Fidic suite of contracts imposes a duty upon the contractor to reduce the effect of any client-caused delay, albeit without spending extra money.

If the contractor has not needed to accelerate, or has not incurred any cost as a result of the measures taken, then there is no entitlement to claim.

It is imperative that the contractor maintains good records regarding the steps taken and the money spent in accelerating the works. The engineer and employer should be kept notified of the acceleration measures planned, implemented and the costs incurred.

To conclude, in order for a constructive acceleration claim to stand a chance, the contractor must ensure that its contract administration is effective.

Of course, a well-reasoned and convincing extension of time submission should be able to avoid such a dilemma.

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