Contract Management in

International Construction

Delay, Disruption and

Acceleration

Michael J.R. Kremer

Beijing, April 28, 2009

1. Introduction
 Time is of essence in basically every construction
project
 Yet, delays of some sort are general rule, rather
than the exception
 Consequence: claims for extension of time, issue of
acceleration
 Therefore, closer look to:
 What are the obligations as to time in general?
 When and how does acceleration become relevant?

Delay, Disruption and Acceleration · April 2009 1

2. Contractor‘s obligations as to time
 Modern construction contracts typically foresee three
separate, but inter-related express obligations:

 First obligation: Contractor to complete works by

certain date or within specified period; possibly with
stage or sectional completion obligation
 Second obligation: Contractor to progress the works
regularly and diligently
 Third obligation: Contractor to prepare and work to an
accepted program (work schedule)

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2.1 First obligation: specific date/period
 In case of “period for completion”, identification of
“commencement date” as well as periods crucial
 e.g.: x months from the “Commencement Date”
 clarification of “days” and “weeks”

 If no date or period foreseen: obligation to complete

“by a reasonable time”
 Standard form contracts regularly provide for
express obligation

Delay, Disruption and Acceleration · April 2009 3

2.1 First obligation: specific date/period (cont’d)
 Effect of specific date of completion
 typically no qualification as of the essence
 clauses for extension of time or liquidated damages

prevent such interpretation

 Specific date of completion of little assistance in
management of the project
 Employer wants to take action early to avoid late
completion
 stage or sectional completion obligations and
liquidated damages give only limited recourse

Delay, Disruption and Acceleration · April 2009 4

2.2 Second obligation: “progress regularly”
 If specific date for completion agreed, no “implied”
second obligation
 Contractor has right to plan, execute and progress
the works
 severe evidential difficulties for Employer

 Therefore: express obligation (regularly included

in standard form contracts)

Delay, Disruption and Acceleration · April 2009 5

2.2 Second obligation: “progress regularly” (cont’d)
 Effect of express obligation to proceed regularly
and diligently
“Proceed continuously, industriously and efficiently with
appropriate resources so as to progress steadily towards
completion substantially in accordance with the contract.”
 Contractor may not slow down even if ahead in
time schedule
 Employer may have remedy of damages, even if

completed in time, if Employer can show “loss”

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2.3 Third obligation: program
 “program/work schedule” no legal term
 Requires basic information of activities or operation
with a list of dates for commencement and completion
of respective activities
 Types of programs:
Bar Chart Network Program Line of Balance

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2.3 Third obligation: program (cont’d)
 Potential roles of the program:
 Monitor role:
- milestone program
- progress program
- prediction program

 Dynamic role
- management program
- compensation program

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3. Employer‘s obligations as to time
 Completion of obligations specified in the contract
 e.g. supply information, provide material, execution
of certain pre-condition works, permits,
appointment of engineer etc.
- at times specified in program
- or reasonable times with regard to execution of works
 Typically no obligation to comply with approved
program, rather obligation not to hinder Contractor
 implied obligation not to hinder
 implied obligation to cooperate

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4. Acceleration
 What does the term mean? What is the benchmark?
 Basically, tow situations relating to the overall
works:
 Contractor is required to finish earlier than the
contractual date
- variation of the contract, i.e. constructive order/change order
- constructive acceleration
 Contractor is likely to complete later than the
contractual completion date
- acceleration to reduce delays

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4.1 Constructive acceleration
 typical example for constructive acceleration claim:

Equipment procured by Employer from a third-party is

delivered late. Contractor’s words are delayed.
Contractor applies for Extension of Time (EOT). Interim
assessment of the Engineer denies EOT; final review
still pending. Employer presses Contractor to increase
resources to make up for the delay.

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4.1 Constructive acceleration (cont’d)
 Contractor‘s stark choice:
 Continue in hope to prove EOT or “accept” to be in
default temporarily and take steps to mitigate
 Nature of problem: contract’s EOT procedures
and contractor’s “temporary default”
 Conclusion: Constructive acceleration claim
presents significant legal difficulties; claim for
disruption may be possible with fewer legal
difficulties

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4.2 Acceleration to reduce delays
 The issue of right or obligation to reduce the effect of
qualifying delays may arise in three ways:

- Contractor’s may have right to choose how to deal with a

qualifying delay and whether to accelerate or not and to
recovery on the basis of this right;

- Contractor may be entitled to EOT and any associated loss

only to the extent that he has mitigated the effect of the delays;

- Contractor may be under an obligation to progress the works

including an express obligation to mitigate delays and the
failure to do so prevents remedies of EOT/associated losses.

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4.2 Acceleration to reduce delays (cont’d)
 Mitigation of delay by acceleration?
 Contractor reacts to the qualifying delay
- most contracts provide for EOT provisions and express terms
for agreement for acceleration
- generally no right of contractor to accelerate and recover costs
(except if “constructive order”)
- “reasonabless”-argument
 Contractor does not react to the qualifying delay
- Generally no obligation where EOT provisions apply
 Mitigation by managing delay?
 obligation to re-plan recourses and activities
 obligation to progress “regularly & diligently” includes
managing of effects of delay

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4.3 Obligation to accelerate?
 Differentiation by reason for delay:
 Delay not caused by Contractor, i.e. entitled to EOT
- no obligation; only by means of separate agreement
 Delay caused by Contractor:
- in principle no obligation (discretion of contractor in regard of
his own culpable delay)
- contract may provide power to order Contractor to adopt
acceleration measures
 “Indirect” obligation
 Contractor must weigh costs of acceleration, chance of
recovery against liquidated damages potentially levied
against him

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4.4 Entitlement to acceleration
 Contractor may perceive commercial advantage
to accelerate; generally only bound by completion
date
 Generally no obligation of the Employer to co-
operate
Exception: entitlement of acceleration provided in
the contract and bound to program

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5. Conclusion
 Time is of the essence in construction projects
 The effort of planning, negotiating and drafting
does not end at providing sophisticated terms for
the event of delays by
 finding a realistic completion date,
 incorporating EOT provisions and delay related
liquidated damages
 Instead, the same though and sophistication
should be put in addressing delays in terms of
acceleration, rather than only dealing with them in
terms of EOT and liquidated damages.

Delay, Disruption and Acceleration · April 2009 17

 Contract Management in
International Construction
Beijing, April 28, 2009

Delay, Disruption and

Acceleration

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