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Delay, Disruption and

 Acceleration

Michael J.R. Kremer 

Contract Management in

International Construction

Beijing, April 28, 2009

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Delay, Disruption and Acceleration · April 2009 1

1. Introduction

Time is of essence in basically every constructionproject

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?

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Delay, Disruption and Acceleration · April 2009 2

2. Contractor„s obligations as to time 

Modern construction contracts typically foresee threeseparate, but inter-related express obligations:

First obligation: Contractor to complete works by

certain date or within specified period; possibly withstage or sectional completion obligation

Second obligation: Contractor to progress the works

regularly and diligently

Third obligation: Contractor to prepare and work to anaccepted program (work schedule)

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Delay, Disruption and Acceleration · April 2009 3

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

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Delay, Disruption and Acceleration · April 2009 4

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 inmanagement of the project

Employer wants to take action early to avoid late

completion

stage or sectional completion obligations andliquidated damages give only limited recourse

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Delay, Disruption and Acceleration · April 2009 5

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)

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Delay, Disruption and Acceleration · April 2009 6

2.2 Second obligation: “progress regularly” (cont‟d) 

Effect of express obligation to proceed regularlyand 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 intime schedule

Employer may have remedy of damages, even if 

completed in time, if Employer can show “loss” 

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Delay, Disruption and Acceleration · April 2009 7

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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Delay, Disruption and Acceleration · April 2009 8

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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Delay, Disruption and Acceleration · April 2009 9

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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Delay, Disruption and Acceleration · April 2009 10

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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Delay, Disruption and Acceleration · April 2009 11

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). Interimassessment 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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Delay, Disruption and Acceleration · April 2009 12

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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Delay, Disruption and Acceleration · April 2009 13

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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Delay, Disruption and Acceleration · April 2009 14

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 termsfor 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” includesmanaging of effects of delay

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Delay, Disruption and Acceleration · April 2009 15

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 leviedagainst him

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Delay, Disruption and Acceleration · April 2009 16

4.4 Entitlement to acceleration

Contractor may perceive commercial advantageto accelerate; generally only bound by completion

date

Generally no obligation of the Employer to co-

operateException: entitlement of acceleration provided in

the contract and bound to program

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Delay, Disruption and Acceleration · April 2009 17

5. Conclusion

Time is of the essence in construction projects

The effort of planning, negotiating and draftingdoes not end at providing sophisticated terms for the event of delays by

finding a realistic completion date,

incorporating EOT provisions and delay relatedliquidated damages

Instead, the same though and sophisticationshould be put in addressing delays in terms of 

acceleration, rather than only dealing with them interms of EOT and liquidated damages.

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Clifford Chance, Königsallee 59, 40215 Düsseldorf, Germany

© Clifford Chance 2009

Clifford Chance Partnerschaftsgesellschaft von Rechtsanwälten, Wirtschaftsprüfern,

Steuerberatern und Solicitors · Sitz: Frankfurt am Main · AG Frankfurt am Main PR 1000

www.cliffordchance.com

Delay, Disruption and

 Acceleration

#960898

Contract Management inInternational Construction

Beijing, April 28, 2009