Master Builders KwaZulu-Natal - What is Constructive Acceleration?

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WHA T IS C ONST RU CT IVE A C CEL ERA TIO N?

Contractors and subcontractors often argue that they have been forced to accelerate the works to overcome delays caused by the architect, engineer or principal agent. Normally, in the absence of an agreement to accelerate, the contractor is not entitled to decide unilaterally to accelerate and expect the employer to pay the costs. The contractor or subcontractor may, however, argue that he chose to accelerate faced with the agents refusal or neglect to grant a proper extension of time. This is sometimes referred to as a constructive acceleration order. Constructive acceleration is defined by the US Corps of Engineers as; An act or failure to act by the Employer which does not recognize that the contractor has encountered excusable delay for which he is entitled to a time extension and which required the contractor to accelerate his programme in order to complete the contract requirements by the existing contract completion date. This situation may be brought about by the Employers denial of a valid request for a contract time extension or by the Employers untimely granting of a time extension. In the Australian case of Perini Pacific v Commonwealth of Australia (1969) Mr Justice Macfarlane in the Commercial Court of New South Wales indicated clearly that this type of claim could only be on the basis of some proven breach of contract by the owner coupled, of course, with proof of damages in the form of completion to time by expenditure greater than would otherwise have been incurred. In that case, the breach consisted of a refusal or failure by the certifier to give any consideration at all to the contractors applications. In the case in British Columbia of Morrison-Knudsen v BC Hydro & Power the owner, unknown to the contractor, had secretly agreed with a government representative that no extension of time would be granted in view of the pressing need for electricity by the contract completion date. All requests for an extension of time were refused and the contractor carried on and managed to finish the project with only slight delay. The Court of Appeal of British Columbia held that the contractor could have rescinded on the basis of a fundamental breach of contract had he known the real reason for the refusals and, in that event, would have been entitled, on the basis of established case law, to put his claim alternatively on a quantum meruit basis and so to escape from the original contract prices. The fact that the contractor had not rescinded but had completed the project limited his remedy to the usual one of damages, measured in this case in terms of the additional expense incurred in completing to time, i.e. in accelerating progress. Similarly in W Stephenson (Western) Ltd v Metro Canada Ltd (1987) the Canadian Court held that, by stating in no circumstances would the contractor receive an extension of time for completion, the employer had deliberately breached the contract and it awarded damages calculated by reference to the contractors consequential acceleration. The English courts have been a little slow at recognising a situation where a claim for constructive acceleration would be relevant. However, the situation has been changed by the decision in Motherwell Bridge Construction Ltd v Micafil (2002). In this case Motherwell Bridge was a subcontractor to Micafil in connection with the construction of an autoclave for BICC in Kent. Additional welding was required by Micafil which involved a substantial amount of additional man hours. Micafil failed to grant an appropriate extension of time. In an effort to complete by the original completion date, Motherwell Bridge incurred substantial additional costs which formed the subject of a claim. The matter was referred to court which found in favour of Motherwell Bridge. Judge Toulman considered that Motherwell Bridge was entitled to an extension of time based upon the period of delay which would have been incurred using the original labour force, and as Micafil failed to grant an extension of time, Motherwell Bridge was entitled to be paid the acceleration costs. It would seem that to recover payment in respect of constructive acceleration a contractor or subcontractor must be able to demonstrate the following: 1. 2. 3. 4. 5. 6. An entitlement to an extension of time Proper notice as required by the contract has been served The employer or his agent has failed to grant an appropriate extension of time The employer has requested completion by the original completion date The contractor has incurred additional costs due to taking acceleration measures The cost to the contractor in taking acceleration measures when estimated in advance of the

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http://www.masterbuilders.co.za/news/2009/August/what_is_constructive_acceleratio... 2009/11/28

Master Builders KwaZulu-Natal - What is Constructive Acceleration?

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decision being made to accelerate, is less than the cost resulting from an overrun to the completion date.

BRUCE LYL E | MEMBERSHIP SERVICES MANAGER (Original article by R D Pickles - former Membership Services Manager)

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