Welcome to the new issue of Grow Your Knowledge Newsletter where you get free, ready to use, actionable, clear information regarding FIDIC Contracts and Construction Claims.
Today at a Glance;
➤ Term of the Week
➤ One Tweet
➤ How to Prepare Acceleration Claims?
TERM of the WEEK
ONE TWEET
Happy Thursday.
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Submitting an effective acceleration claim will allow you to be paid for the costs you incurred due to;
➤ Speeding up the project to achieve completion earlier than planned, or,
➤ Accelerate works to meet the original completion date despite being entitled to an extension of time
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You are ready to claim the acceleration if;
1. You are instructed by the Employer to accelerate the Works which is called Direct Acceleration
2. You are entitled to an extension of time due to an excusable delay but despite this, you accelerated works and completed them as planned which is called Constructive Acceleration
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Additionally, you should consider these details while submitting an acceleration claim;
1. Understand and comply with the Notice requirements, such as;
➤ Timing of the Notice
➤ The Information it should contain
➤ To whom it should be sent
2. Costs incurred with acceleration, such as;
➤ Additional labour
➤ Extra equipment
➤ Working overtime
➤ Additional supervision
3. Demonstrating facts, such as;
➤ Employer’s instruction
➤ Acceleration
➤ The excusable delay
➤ Extension of Time
4. Methods for Quantifying the Claim, such as;
➤ Total Cost Approach
➤ Modified Total Cost Approach
➤ Discrete Cost Approach
➤ Measured Mile Approach
➤ Quantum Merit Recovery
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Let’s clarify.
Steps of Preparing Acceleration Claims
1. Identification of the Acceleration Event
1.1 Directed (Instructed) Acceleration
1.2 Constructive Acceleration
2. Contractual/Legal Entitlement
3. Notice of Acceleration Claim
4. Factual Evidence
5. Quantification of the Acceleration Claim
1 Identification of the Acceleration Event
1.1 Directed (Instructed) Acceleration
1. The Employer instructs the Contractor to accelerate the work to mitigate the delay for which the Employer is liable.
2. In another case, the Employer instructs the Contractor to complete the project earlier than the time for completion stated in the Contract.
3. The Contractor incurs additional costs and is entitled to additional payment due to acceleration.
1.2 Constructive Acceleration
1. The Contractor has a justified claim for an extension of time.
2. The Employer refuses to adjust the completion date of performance.
3. The Employer requires the Contractor to complete the project by the original completion date.
4. The Contractor accelerates and completes the work on the original completion date.
That is called Constructive Acceleration.
Then the Contractor claims for its acceleration costs.
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To mitigate the exposure for Liquidated Damages, the Contractor may consider speeding up or accelerating the remaining works.
But, in this case, the Contractor will not be entitled to additional payment.
This is called voluntary acceleration.
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2 Contractual / Legal Entitlement
In this section, the Acceleration Claim should be linked to an entitlement under the contract.
The right to order an acceleration regarding the works may be expressly stated in the contract.
Constructive Acceleration claim is likely to be grounded on the Employer’s breach in performing the Contract.
1. The terms of the Contract should be reviewed and the rights of the Contractor under the Contract should be identified.
2. An important step for the Contractor is to notify and seek to establish its entitlement under the Contract.
3. It should be kept in mind that more than one clause of the Contract may be at the root of entitlement.
3 Notice of Acceleration Claim
The Contractor should understand and comply with the Notice requirements under the Contract, such as;
1. Timing of the Notice.
2. The information it should contain.
3. To whom it should be sent.
4. The proper manner of providing Notice.
4 Factual Evidence
In this section, the evidence and analysis to prove the link between the acceleration event and the acceleration suffered should be demonstrated.
4.1 Proving the Directed (Instructed) Acceleration Claim
1. Instruction for Acceleration.
2. The Contractor Accelerates the Work.
3. The Acceleration Occurs.
4. The Contractor Incurs Additional Cost due to Acceleration.
4.2 Proving the Constructive Acceleration Claim
1. The Contractor experiences an excusable delay.
2. The Contractor informs the Employer regarding the excusable delay.
3. The Employer refuses the time extension request of the Contractor.
4. Acceleration efforts by the Contractor results in additional costs.
5 Quantification of the Acceleration Claim
In this section, the cost that is experienced due to the acceleration should be valued.
An acceleration claim consists of claims for reimbursement of costs arising from additional resources deployed, extending working hours, increased plant and labour and other measures taken to accelerate the works.
1. Under a directed (instructed) acceleration, the party ordering the acceleration is liable for the costs associated with the accelerated efforts.
2. The cost calculated due to acceleration should be reasonable.
3. All the evaluations, analyses, methods and assumptions regarding the evaluation must be transparent and clearly explained.
Methods of Calculation
A variety of cost methods may be utilized to demonstrate acceleration costs.
➤ Total Cost Approach
➤ Modified Total Cost Approach
➤ Discrete Cost Approach
➤ Measured Mile Approach
➤ Quantum Merit Recovery
See you next week.
This information is provided for your convenience and does not constitute any “Legal Advice”. This document is prepared for the general information of the interested persons. This should not be acted upon in any specific situation without appropriate legal advice.
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