Typical Issues
Acceleration claims are fact intensive and, crucially, circumstantial. The following issues tend to arise for such claims:
- Establishing the background situation. In particular, ascertaining and setting out why the rate of progress of the Contractor permits an instructed acceleration.
- A lack of clarity around the basis of valuation and contention over the method of valuing acceleration under the Parties’ the agreement. Generally, this concerns whether the method is performance linked to achieve an existing milestone date or to bring forward the date for completion of the works.
- Record-keeping, including mobilisation records, are necessary to inform the evaluation of the step change in resources. This typically records an increase in manpower and, potentially, the cost of out of hours work. Notably, any increase in labour requirements may also have a corresponding equipment acceleration cost.
Insight
Acceleration can arise by Employer instruction or the Contractor bringing a claim for constructive acceleration, depending on the circumstances. Such claims are reliant upon there being a change in circumstances as well as the Employer’s non-compliance with the Contract maintaining existing milestone or sectional completion dates or the completion dates and not offering the Contractor relief by way of an extension.
Complication can arise where the parties have a mutual intention to accelerate and commence accelerative measures, but the scope of the acceleration instruction lacks clarity. The precise mechanism for evaluating the additional resources may be vague resulting in competing assessments.
Slow progress of the works may lead to disagreements. It may be argued that this is a result of the Contractor’s underperformance prior to the acceleration, which the Employer may counter-claim occurred because the Contractor under-resourced against its original resourcing plan.
Competing factual and contractual arguments often gives rise to contentious claims, conflating acceleration with asserted prolongation claims, either serially or in parallel, depending on the parties’ positions. In our experience, the valuation of acceleration claims often turns on alternative valuations.
If the parties have agreed a lump sum fixed amount, this may be subject in part to an incentive arrangement. Incentive amounts are payable on achieving an earlier completion date for an increase in the rate of progress. Depending upon the incentive arrangement, the sums owing will be subject to a performance verification and an assessment of the actual resources deployed.
The valuation of acceleration can consider both increased resourcing, to achieve the original completion dates, and setting off planned resources, which should have been priced into the original resourcing plan and not expended prior to the commencement of the acceleration measures. As part of the contract administration, levels of resourcing are subject to a verification of any deployed additional resources and resources maintained on site (i.e., those resources exceeding the anticipated resources prior to the acceleration instruction).
Another factor in evaluating acceleration claims will be the contractual basis for acceleration claims, and whether the claims can be advanced on a lump sum fixed price or rate-based valuation or cost based method of valuation.
Acceleration situations benefit from an in-depth understanding of the issues that can arise and a thorough review of the basis of the acceleration. The financial adjustment mechanism and proper contract administration inform what is intended and caught by the acceleration.