Builders and Contractors Exchange
Weekly Bulletin: 7 dec 2007
Hey, Can't You Do That A Little Faster? Construction Accelleration - A Primer
The simple definition of "acceleration" is an increase in speed*. For construction projects, this comes into play when a contractor or subcontractor is required to perform earlier than originally required. Sometimes this is for another party's convenience; other times it is because of project delays. However it occurs, accelerated work can have a flow effect on productivity and costs, which may or may not be compensable.
Acceleration may result from a direct order. When this is the case, the compensability question goes to why the acceleration was ordered. If it was ordered because the contractor was behind schedule, the resulting costs are generally not compensable. But if the acceleration order results from conditions that are not the contractor's responsibility, the resulting acceleration costs generally are compensable.
Acceleration may also result from an indirect order or directive. The latter is sometimes referred to as "constructive" acceleration. The same questions of compensability apply to constructive accelerations. Compensation is typically warranted when the following three elements are established:
- The delays giving rise to the acceleration were excusable;
- The contractor was ordered to accelerate; and
- The contractor accelerated performance and incurred extra costs.
Recoverable acceleration costs are those costs required to speed up the work, or resulting from the speedup. They include such directly allocable items as overtime, premium wage costs, and expedited material shipment costs. But a number of studies have also shown that accelerated work decreases worker efficiency. If this occurs, and it results in monetary loss, and if that monetary loss can be attributed to the acceleration, then the costs are an additional compensable acceleration cost. But these are more difficult to prove since, typically, those costs are not directly allocable or independently verifiable.
Recovery for acceleration can be affected by your contract terms, so ensure that you consider this as you review any proposed contract. For example, it is not uncommon to see specific "proof" requirements contractually tied to acceleration claims such as FRAGNET analysis or the like. Also, some contracts contractually allocate the risks of acceleration losses between the parties, including total waivers of acceleration claims. Generally, parties are free to negotiate such terms as any other contractual terms, and the Virginia courts rarely intercede, even if the court thinks in hindsight that the terms were a bad bargain. Accordingly, make sure related matters are part of your negotiation considerations and, once under contract, know and follow the established procedures, including claims notice, cost recording, etc.
For more information about construction acceleration, or similar issues, please contact Neil Lowenstein, or any of the other members of the Vandeventer Black Construction Team.
* E.g., Webster's Online Dictionary, http://www.websters-online-dictionary.org/definition/acceleration (last accessed 11/05/07).
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.