An acceleration claim is a great key.
A great key for compensation of the costs incurred due to acceleration of Works.
Of course, if it is properly prepared.
Let’s clarify.
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Delays are almost inevitable in construction.
And these delays eventually have serious effects, both;
During the construction phase, such as;
➤ Failure to meet the performance criteria
➤ Cost overruns
➤ Disputes
And during the operation phase, such as;
➤ Not beginning to generate cash flow as predicted or earlier
➤ Not making the expected profit
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Acceleration is one of the most powerful remedies to avoid the negative effects of delays.
By acceleration, you speed up the work.
And as a result, you avoid the delay.
However, you will have to bear some costs, such as;
➤ Additional labour
➤ Extra equipment
➤ Working overtime
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At this point, you will need a tool to compensate for these costs.
This tool is “acceleration claims”.
In today’s newsletter, we broke the “acceleration claims preparation process” down into 5 steps.
Steps of
Preparing
Acceleration Claims
01
Identification of the Acceleration Event
02
Contractual / Legal Entitlement
03
Notice of Acceleration Claim
04
Factual Evidence
05
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.
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.
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 informes 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 an 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.
1. Total Cost Approach
2. Modified Total Cost Approach
3. Discrete Cost Approach
4. Measured Mile Approach
5. Quantum Meruit Recovery
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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