Last edited 23 Oct 2019

Agreement for the acceleration of construction works

[edit] Introduction

Generally, it is the client that requires acceleration of construction work. A client might be anxious that its building is handed over earlier than is set out in the contract or, where the contractor has been allowed extensions of time, earlier than the revised completion date.

In the latter case an acceleration agreement can be used as a 'wrap up' agreement expunging all outstanding claims for extensions of time and loss and expense.

Before instructing the contractor to accelerate the works, there is a negotiating period, sometimes within a time frame stipulated in the construction contract. The contractor will put together a proposal that should include:

Additional resources of manpower, plant and materials directly employed or subcontracted.
The revised methodology and actions to be taken to achieve the accelerated date. This might include off-site prefabrication, extra scaffolding and temporary weatherproofing.
A revised programme with target intermediate dates by which progress can be measured. This might include proposals for phased completion if this is advantageous to the client.
A statement on working hours on- and off-site, including weekends, holidays, night working and shift working if applicable.
Additional supervision and any other increased costs for items categorised as preliminaries.
Any concessions made by the client to assist the programme which might include:
1. Changes to design or specification (for example, standardisation replacing bespoke solutions).
2. Reduction in scope (for example, transferring work to a separate post-contract agreement for occupational works).
3. The terms of settlement of all outstanding claims. This will include payment that might be linked to achieving the revised programme milestone dates.

The client’s consultant team should be asked to prepare a report on the contractor’s acceleration proposals, including a risk assessment of matters that may impede the contractor in achieving the revised programme.

The cost consultant in particular should comment on the validity of the detailed prices set out in the contractor’s proposal. The design team should comment on any proposed changes to the design or specification.

The client and consultant team might want to re-assess exactly how risk should be allocated in the work to be undertaken and whether any changes to the original contract might be appropriate. For instance, a reduction in the first month of liquidated and ascertained damages might lead to a reduction in the sum of money the contractor has put in their price for risk in case of failure to meet the revised completion date.

At the opposite extreme, a set of one-off bonus payments for each milestone achieved can encourage the contractor to go flat out, spending contingency money to collect the bonus payments.

In the end, only the client can weigh up whether or not the proposal represents value for money within the context of its business plan for the development .

It is advisable to have an agreement drawn up by a lawyer reflecting the outcome of negotiations. It is usual for acceleration agreements to be treated as an addendum to the building contract. As such, it is advisable to have it drafted by the legal team that put together the original contract documents so that inconsistencies and ambiguities are avoided.

The agreement must also include details of:

What happens if the contractor fails to implement some or all of the measures in its proposals?
What happens if the contractor fails to meet intermediate targets and/or the completion date?
The points at which each payment is due.
Changes required to the existing contract documents to accommodate the acceleration agreement, including any changes to design or specification.
The treatment of retention in respect of acceleration, claims and bonus payments.