The acceleration provisions (clause 36) are actually very simple under the contract and are the mechanism for bringing forward the Completion Date at the request of the Project Manager to encourage an earlier completion. In very simple terms when dealing with compensation events the Contractor is obliged to mitigate delay (do things differently but at no cost or dis-benefit to the Contractor) but is not obliged to accelerate. The Project Manager can request the Contractor to provide a quotation for acceleration, and the Contractor provides a quotation or gives a reason for not doing so. The whole premise is that you can not force acceleration upon a Contractor, however the Contractor should look out for additional changes to the contract (Z clauses) specific to that project that may try to change this concept. The main reason for the contract not allowing acceleration to be imposed is that in reality how can you practically force a Contractor to accelerate, and indeed is a principle in law that it can not be imposed. It is also very important to realise that there is no formal requirement on what basis it should be founded or how to present the acceleration quotation. This clause is simply a methodology to agree and formalise an agreement to bring forward the Completion Date.
Even more importantly there is no mechanism for a Project Manager to make his own assessment of a Contractor’s acceleration quotation, whereas he can assess a compensation event if he feels that the Contractor has not valued it in accordance with the contract. A key reason for not allowing the Project Manager to impose his own assessment of an acceleration is that the biggest component of an acceleration quotation is often not the base cost of providing additional resources or materials, but the amount to compensate the Contractor for the increased risk of not completing on time, which would incur liability and possible delay damages. It is perfectly acceptable by agreement to negotiate with a Contractor to bring the cost down to a perceived acceptable level, for which the Employer would be prepared to pay for the benefit of an earlier Completion Date. In either case, the only decision for the Project Manager (whether negotiations have taken place or not) is to accept the quotation for the agreed acceleration period and hence change the Completion Date, or not accept, in which case the Completion Date will remain as it was on the last Accepted Programme.
A Contractor is only obliged to meet the latest Completion Date if there are no further compensation events with a direct delay to the Completion Date on the last accepted programme. If a compensation event delays planned Completion, then the Completion Date will be affected however important that date may be. The Contractor can then be requested to provide a quotation to accelerate, which should in most cases be possible, generally at an increase to the total of the Prices which will ultimately be paid for by the Employer within the quotation. This is however a two stage process, where the compensation event delays planned Completion and hence Completion Date, whilst the subsequent acceptance of a quotation for acceleration if one has been requested would bring it back again(if possible).
Some Project Managers may expect the Contractor to provide these acceleration measures in a one stage approach where they provide the quotation for maintaining the original Completion Date within the initial compensation event by asking for alternative quotations. Whilst this may appear quite practical, it is important to remember that on that basis, the Project Manager would be able to make his own assessment of the compensation event, which in this instance would include the cost to maintain the current Completion Date and more importantly the cost of risk to maintain that date. It is highly likely that the Employer’s view of risk will be lower than that of the Contractor. It is equally important to remember that the Contractor is obliged to mitigate (reschedule works at no cost or inefficiency to himself to optimise planned Completion) but not to accelerate (generally incur cost to do things quicker). Therefore, it should be recommend that a quick two stage approach gives the maximum visibility to both parties and less subjectivity within the assessment i.e. show the effect a compensation event has had on planned Completion and then provide a separate quotation demonstrating the cost to accelerate the Completion Date to an agreed date.
Author: Glenn Hide