Constructive Acceleration

Constructive acceleration occurs when a delay takes place beyond a contractor’s control, and yet the owner expects the job to be completed by the original contract completion date. A contractor’s claim for constructive acceleration should meet the following criteria:

• The delay is a result of causes that would entitle the contractor to time extension under the contract
• The contractor requests time extension for the delay in a timely manner, in accordance with the contract
• The owner fails or refuses to grant a time extension to the contractor
• The owner requires the contractor to complete the work in accordance with the original schedule or indicates an intention to penalize the contractor for failing to complete the work in accordance with the original contract schedule
• The contractor then endeavors to accelerate by working additional hours, by committing additional resources, or by other means
• The contractor incurs additional expense in carrying out these acceleration efforts

What Does a Contractor Need to Do?

The contractor must recognize delays for which there is a contractual entitlement to a time extension and formally request the time extension, in writing. The contractor should give notice promptly, estimating the number of days required while reserving the right to follow up with further information as quickly as it becomes available. Every contractor should be aware that a constructive acceleration claim is very difficult to establish unless notice of the delay claim was given and a time extension requested.

If the owner responds to a time extension request by declaring that the work must be completed in accordance with the original schedule or threatens to invoke the liquidated damages provisions, the contractor should interpret the owner’s position as an order to accelerate and give notice accordingly, spelling out what the contractor intends to do to comply (overtime, night shift, etc.) The contractor should also give notice of intent to request additional compensation from the owner to cover the costs of these acceleration measures and any resultant impact or inefficiencies.

What Does an Owner Need to Do?

An owner must recognize that any failure to take prompt and appropriate action on a time extension request may result in an expensive constructive acceleration claim. When evaluating the request, an owner should refrain from following up with any instructions and actions that may be construed as constructive acceleration orders.

An owner who perceives that a dispute is imminent should consider the alternatives. A constructive acceleration claim may be much more expensive than a simple delay claim. Is the facility absolutely needed by the original completion date? If the answer is yes, it may be cheaper in the long run to negotiate with the contractor for a mutually acceptable basis for acceleration.

More Details Owners and Contractors Need to Know

Does the contractor’s acceleration have to be successful to warrant a claim? No. All that is required is that the contractor incur extra costs in a legitimate effort to accelerate.

Does the original delay have to be one in which the contractor is entitled to delay damages? Generally not (but some legal decisions have interpreted virtually any claim to be “delay damages”). If the contractor is entitled to time extension, but not damages, under a force majeure clause, or in a contract with a no-damages-for-delay clause, failure to grant time extension when due may leave the owner vulnerable to a constructive acceleration claim. It is not uncommon for an owner to give up the protection of a no-damages-for-delay clause carelessly by failing to grant the time extension that would have been the contractor’s only compensation for delay under the terms of the clause.

Source: Interface Consulting

Released: July 30th, 2007 11:00 AM

Phone: (713) 626-2525

Fax: (713) 626-2555

Email: contact@interface-consulting.com

Category: construction claims analysis

Subcategory: interface