October 7, 2022
Directed and Constructive Acceleration
Time is money—especially on engineering and construction projects. Because delays in project completion usually increase owner and contractor costs, overall performance time is vital to a project’s financial success. The importance of time is evidenced by the significance of CPM schedules, completion dates, and milestones in the bidding and awarding of engineering and construction contracts. The desire to minimize costs and contractual performance time often leads to directed or constructive acceleration.
Directed acceleration typically occurs when under contract provisions, an owner or construction manager issues a specific order to its contractor to: 1) complete the project earlier than the originally scheduled completion date, or 2) utilize overtime, additional shifts, and/or extra engineering or construction labor, supervision, or equipment to complete the base contract work plus additional or changed work within the original contract time. A general contractor may also issue such orders to a subcontractor. These measures may increase costs that would otherwise not have been incurred.
Constructive acceleration typically occurs when a construction contractor encounters excusable delays, which may be compensable or noncompensable, during its performance of the contract work, such as design changes, added scope, unusually severe weather, differing site conditions, acts of God, or owner-caused delays. Depending on the contract terms, the contractor may then be entitled to a time extension equivalent to the time that the excusable delays extended the project’s critical path. The contractor is constructively accelerated when it is not granted the time extension. The contractor must then decide whether to accelerate its performance to meet the mandated completion date and incur increased costs to do so.
Absent a direct or written order, it often becomes difficult to ascertain if a contractor has been constructively accelerated—and such uncertainty often results in disputes. Courts traditionally examine five key elements to determine if a contractor’s work has been accelerated:
- Excusable Delay: The contractor has encountered delays determined to be unforeseeable and beyond its control, for which it is entitled to a time extension.
- Request for Time Extension: The contractor specifically requested a time extension from the owner or construction manager according to the contract provisions and in a timely manner, or the obligation to give notice was otherwise excused.
- Denial of Time Extension: The owner or construction manager issued an order, express or implied, directing the contractor to overcome the delay, complete the work at the earliest possible date, or complete it at a date earlier than the completion date as adjusted for the excusable delay.
- Acceleration Order: The owner or construction manager’s actions, either express or implied, directed the contractor to overcome the delay, complete the work at the earliest possible date, or complete the work earlier than the contract completion date as adjusted for the excusable delay.
- Incurred Costs: The contractor must demonstrate that it attempted to accelerate performance and, in doing so, incurred increased costs or damages due to the accelerated performance effort.
If these elements are proven, the contractor may then be entitled to recover the costs incurred in accelerating its performance. The costs to be reimbursed need not depend on the achievement of the original completion date. The contractor may only have to demonstrate that it attempted to accelerate and incurred increased costs as a result of its reasonable attempt. Thus, if a contractor fails to meet the original contract completion date but completes construction before a valid, adjusted contract completion date, it may still have a valid claim for constructive acceleration.
The types of costs that are typically allowed for acceleration claims include:
- Increased construction labor costs for overtime, additional shifts, working six or seven days per week, or combinations of these efforts
- Increased construction equipment maintenance costs associated with longer work hours
- Increased construction equipment rental expenses associated with overtime work
- Cost of additional construction equipment or materials
- Expediting equipment and material deliveries
- Increased field supervision
- Increased job site expenses
- Increased home office overhead expenses
- Subcontractor costs. To finish on time, some work may be subcontracted at a higher cost than that of the contractor’s own labor force. The difference in the cost is the amount of damages.
- Loss of efficiency and productivity associated with overtime, increased crew sizes, stacking of trades, re-sequencing of work, and other impacts
When faced with acceleration, the contractor is obligated to mitigate the damages whenever reasonable. This mitigation may involve increasing its labor force rather than incurring overtime, using extra equipment rather than more labor, or reducing jobsite overhead when an accelerated project is completed early. The contractor must use any available and reasonable means it has to reduce damages. As a practical matter, on an accelerated project, the contractor has been asked to work quickly and do everything possible to meet a deadline. The contractor is often focused not on identifying cost savings but on completing the construction as quickly as possible. Therefore, mitigation opportunities may be minimal. Cost savings that the contractor achieved in the normal performance of the contract, such as in the buyout of subcontracts and material, do not need to be subtracted from the damages. The contractor would have been entitled to keep these savings had no acceleration occurred.
Acceleration claims often require complex CPM schedule analyses to demonstrate that the contractor accelerated its work and to prove that the contractor is entitled to recover damages. Other issues that may affect acceleration claims include contract clauses defining the owner’s right to accelerate, timely notice requirements to inform the owner of excusable delays, and documentation needed to prove acceleration and damages. For a more detailed discussion of acceleration, see Richard J. Long’s article “Acceleration Claims on Engineering and Construction Projects.”
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