Episode 173 - Acceleration in construction

This week we will be talking about Acceleration in construction. This episode content meets PC5 - Building Procurement of the Part 3 Criteria.

Resources from today's episode:

Websites:

• https://www.rics.org/content/dam/ricsglobal/documents/standards/Acceleration_2nd-ed_2024.pdf

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Transcript

Episode 173:

Hello and Welcome to the Part3 with me podcast. 

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I am your host Maria Skoutari and this week we will be talking about Acceleration in construction. Todays episode meets PC5 of the Part 3 Criteria.

So when we refer to the term Acceleration within the construction industry, what does this mean and relate to:

When used in connection with construction contracts, acceleration refers to increasing the originally planned or current rate of progress of the work so as to complete the project earlier than would otherwise be the case.

A contractor on a construction project may want to complete the project early in order to reduce site running costs or free up key site staff to work elsewhere. Or they may want to accelerate in order to ensure completion by the contract completion date so as to avoid liability for liquidated damages. 

Now on the employers side, they may want a contractor to accelerate progress in order to avoid the construction work being handed over late. In many cases, the completion date for a project is crucial to the employer and any deferment of that date may have very serious repercussions. In these circumstances, it may be in the employer’s best interests to compensate the contractor for any additional costs incurred in accelerating the works, rather than to face the cost consequences of the building not being ready when required and also a claim from the contractor for loss and expense in the form of prolongation costs.

If an acceleration request is issued, what is the process and who would be responsible in reviewing and granting it:

Regardless of the form of contract or type of acceleration agreement, an employer considering acceleration will tend to look to the quantity surveyor to provide advice on the practicalities, risks and costs involved. The Quantity Surveyor will ensure that the quotation includes all necessary details such as the amount of time to be saved, direct costs, consequential losses, and the cost of preparing the quotation.

Now looking at the various building contracts more specifically and which other parties assist with the acceleration agreement assessment: 

• Under JCT contracts, after the Quantity Surveyor’s review, the Contract Administrator is the party who formally confirms the instruction to accelerate, stating the agreed adjustments to the contract sum, revised completion dates, and any specific conditions attached to the acceleration. Looking at the JCT Standard Building Contract specifically, it deals with acceleration under the heading of variation quotations and acceleration quotations, which includes wording to the effect that: ‘If the Employer wishes to investigate the possibility of achieving practical completion before the Completion Date… the Architect/ Contract Administrator shall invite proposals from the Contractor in that regard’. If a contractor receives an invitation to make such proposals, they are either required to provide an ‘acceleration quotation’ or explain why it would be impracticable to achieve an early completion of the works. If the contractor provides an ‘acceleration quotation’ it will need to identify the amount of time that can be saved and the amount of the adjustment to the ‘contract sum’ that the contractor would require. The quotation must include direct costs, consequential loss and expense and an allowance for the cost of preparing the quotation. The quotation must be provided within 21 days, unless otherwise agreed, starting from either the date the contractor receives the invitation or the date it receives sufficient information to enable a quotation to be prepared, whichever is later. The quotation must remain open for acceptance for seven days. These time periods may sometimes be varied by agreement between all parties to speed up the process even further.
• Now under NEC contracts, the project manager plays a critical role. Either the contractor or project manager can propose acceleration under the NEC. If both parties are willing to consider it, the project manager instructs the contractor to provide an acceleration quotation. The project manager then reviews the quotation and must reply within a specified period (typically three weeks), either accepting or rejecting it. As with the JCT form, the stated aim of acceleration is to achieve completion before the ‘completion date’. The ‘completion date’ may be the original date stated in the ‘contract data’ or a revised date arising out of an extension of time award. Unlike the JCT acceleration clause, it is not for the contractor to state what acceleration it can achieve. Under the NEC, it is the project manager who informs the contractor of the revised date, or dates, that it is required to achieve. Following receipt of an instruction, the contractor must provide a quotation and a revised programme showing how it can achieve the early completion date(s). If agreed, the revised programme then becomes the ‘accepted programme’. The contractor may decline to quote but, if it does, it must state why. Presumably, the usual reason for declining to quote will be that the contractor considers the revised dates are not achievable.
• And lastly under the Infrastructure Conditions of Contract (ICC), in the ICC, the employer may request the contractor to complete the works earlier than ‘the time or extended time for completion prescribed’ by reference to the relevant clause and the completion date in the Appendix to the Form of Tender. If the employer requests the contractor to complete early and the contractor agrees, then ‘any special terms and conditions of payment shall be agreed … before any such action is taken’.

In any contract type, when preparing an acceleration quotation, the contractor is advised to ensure that it includes a caveat disclaiming liability in the event that further delays are caused by new events that would entitle it to an extension of time. A failure to clarify this point may lead to disagreements and disputes.

Ultimately, however, in any circumstance, the client is the party who decides whether to proceed with acceleration, based on the advice and recommendations made by the quantity surveyor and contract administrator or project manager. The employer's acceptance is formalised through the appropriate contractual mechanism, and any agreement should clearly set out the revised programme, costs, and risk allocations.

Now what happens if a contract doesn’t have an acceleration clause or provision within it: 

Under such circumstances, that doesn’t mean that the client can’t ask the contractor to accelerate. Generally under contract law, its always open to the parties to any contract to agree additional or separate contractual terms. Meaning, an acceleration agreement can be drawn up and entered into whether expressly envisaged under the construction contract or not. 

Parties will of course need to take into account a wide range of possibilities and permutations and agree who carries the risk of each situation that may arise. If this takes too long to agree between the parties, then they might overrun the acceleration that was intended to avoid, so careful consideration will need to be given for post contract agreement additions. 

Let’s move on to how acceleration can be achieved:

Although the standard forms don’t give an indication as to what measures a contractor might consider for inclusion in an acceleration quotation, some possible elements the contractor could consider to improve the rate of progress and which the contractor may be able to change includes:

• Extending the site working hours or introducing shift working increasing the overall rate of progress of works. 
• Increasing the level of resources.  
• Altering the programme and sequencing of work may sometimes be enough to achieve earlier completion without changing working hours or level of resourcing. This is typically more difficult on new built projects. Refurbishment works tend to have more options available for re-sequencing.
• Another potential option to improve the rate of progress is introducing temporary works, for example progress may be expedited by the introduction of temporary weather protection allowing workers to complete tasks in any weather condition.
• Or they could also consider improving working methods by including elements such as floodlighting to allow work to continue after daylight hours. 

Now in addition to the changes a contractor could consider to accelerate works, there are also measures the client can make amendments to to enable acceleration, such as:

• Changes to the specification, for example if a material has a long delivery period, there may be potential to replace it with another similar material with a shorter delivery period. 
• Another options is design changes, for example if there are areas where the design can be simplified or altered to reduce installation period like swapping bespoke joinery with ‘off-the-shelf’ products.
• Or the work scope and conditions of working could be altered,  for example omitting works not required or deferring some of the work until after handover. 

So once acceleration measures have been assessed by the contractor, they will then put together an acceleration quotation:

Now similarly, to the standard forms not giving an indication as to what measures a contractor might consider for inclusion in an acceleration quotation, they don’t provide any guidance on how a quotation for acceleration should be prepared by the contractor or assessed by the employer. Other than general requirements, such as including all loss and expense, there is no indication given as to what items should be included in the quotation or how those items should be priced.

However, it is clear that, in order to prepare a quotation, a contractor will have to decide what it can achieve, how it can achieve it and how much it will cost. 

The decision of what can be achieved is likely to be made by the contractor’s construction or project manager, in conjunction with the site agent and, possibly, the site supervisor and subcontractors. The decision about how to achieve these aims is likely to be made by the construction or project manager and the contractor’s project quantity surveyor. The project quantity surveyor is likely to be the person responsible for applying costs and prices to the decisions made by management.

The main difficulty faced by the contractor when preparing an acceleration quotation is assessing and pricing the risk. Exactly what factors a contractor would take into account when assessing risk will vary from project to project, and the amount of the allowance will depend on commercial considerations and attitude to risk.

If all the risk is to be placed on the contractor, it may be better for a lump sum quotation to be provided, although this will make it difficult for the client to assess the merits of the quotation. It may be that the client is far less concerned about whether individual elements of the contractor’s quotation appear to be high and more about whether the money that can be saved by completing early justifies the money that will have to be spent on acceleration. If the client wants as low a quotation as possible and is prepared to accept the risk of failure to achieve an early completion date, it will be more important for a detailed price breakdown to be obtained from the contractor.

Although the standard forms of contract envisage a quotation being provided before an acceleration agreement is made, the parties may agree to value acceleration measures on the basis of costs actually incurred. If an assessment is to be made on the basis of actual cost, the client will not know the additional cost they will have to pay out until after the measures have been put in place and the costs expended. In this case, the client will have to base their decision on an estimate of the likely cost of acceleration. 

Something clients must always be wary of when it comes to acceleration, is an implied instruction to accelerate:

If a client is under severe pressure to have construction work completed by a particular date, they may occasionally tell contractors that the project must be completed and handed over by the completion date come what may. In such instances, the contractor may point to the extension of time clause in the contract, but a client who is under pressure may be extremely resistant to grant an extension of time and may try to impress onto the contractor the imperative to finish by the specified dates, regardless of any additional cost. It can be argued that a statement like this can be deemed as an implied instruction to accelerate. If a contractor thinks it is being asked to take action to accelerate the works, it would be well advised to clarify the situation rather than to take action in the belief that additional costs will be reimbursed. Equally, professional advisers to an employer making a statement like this ought to seek to clarify the situation.

So factors that should be considered when suggesting and agreeing acceleration measures, should include:

The building contract it is relevant to, for example, in NEC contracts, the programme is an integral contract document, whereas this is not typically the case under the JCT. Also, most contracts will require specific instructions to be given to make changes to the work, or the conditions under which it is to be carried out, while some require the express permission of the contractor to omit parts of the work. 

One general point, which applies to any acceleration measure, is that the changes must be focused on activities that are critical to completion. If the progress of a particular activity is expedited, it will only bring forward the overall completion date if it is an activity that is on the critical path of the programme.

Additionally, cost may be a prohibiting factor, as the initial costs provided for the works from the contractor would have been based on optimum levels of resources and adopting efficient procedures and methodologies, changing these as part of the acceleration quotation will create an imbalance or loss of efficiency. When an acceleration agreement has been reached, it is important that the parties make a careful and accurate record of progress achieved at the date when acceleration commences.

As such, decisions regarding acceleration should be based on a thorough cost-benefit analysis, considering various risks and potential outcomes. 

To sum up what I discussed today:

• When we refer to acceleration in construction it refers to increasing the rate of work to complete a project earlier than originally planned, often to reduce costs or avoid penalties for late completion. Both contractors and employers have strong incentives to accelerate. Contractors may want to minimise site costs or free up resources, while employers often seek early completion to avoid serious repercussions from project delays.
• The process involves careful assessment and agreement. Quantity surveyors evaluate the practicalities, risks, and costs, while contract administrators or project managers formalise the agreement, ensuring all adjustments to time and cost are clearly documented.
• Acceleration can be achieved through various means, such as extending working hours, increasing resources, re-sequencing tasks, introducing temporary works, or making specification and design changes to speed up progress.
• Assessing and pricing risk is a major challenge. All parties must clarify who bears which risks, and agreements should be thoroughly documented to prevent disputes. A thorough cost-benefit analysis is essential before proceeding with acceleration measures.