This is the first in a three-part series on drafting acceleration clauses. This post will examine the considerations necessary before committing to an acceleration clause.

I have been involved in a INR 2000 crore (US$250 million) Indian Public Sector EPC Project based on the FIDIC Silver Book 1999 (modified as usual by PCC – but not distorted), wherein we decided to include an Acceleration (Directed Acceleration) clause- a first in Indian Public Sector Construction Projects.

  • Acceleration clauses look easy, but are actually quite difficult to implement. The aspects that we considered were:
  • Do we really need an acceleration clause? Can’t we just achieve this through an amendment to the contract or Supplementary Agreement?
  • How much acceleration is actually feasible?
  • Should acceleration be applicable for only extended periods or for the original period of the contract as well?
  • What will be the correlation of acceleration with the bonus clause, which was also there in the contract?
  • How will we value and ascertain the payment for the acceleration? Will the Contractor be able to substantiate his expenses? Is the valuation likely to lead to disputes?
  • What if we do not get willing acquiescence of the Contractor for the acceleration?
  • Should we instruct acceleration only if there is mutual consent of both parties or, like a Variation, wherein the Contractor has limited rights to dissent?
  • Will we be able to measure, quantify and agree to additional costs beforehand, keeping in view time constraints?
  • How can we assure the Contractor that he is likely to get his additional costs due for acceleration?
  • Will the Contractor be subject to Liquidated Damages or will he get part acceleration costs or both, in case he is not able to achieve the full desired
  • Acceleration and complete by the revised date?
  • In case there is a delay/disruption during the accelerated period due to neutral or Employer-caused events, how will that be quantified? And what will be its interface with the accelerated period and acceleration being undertaken by the Contractor?

Acceleration may be achieved through a combination of many methods, such as:

  • Utilising additional resources,
  • Early delivery of material,
  • Using better technology, and/or
  • Change in sequence/methodology.

To be entitled to acceleration costs, the Contractor needs to prove:

  1. He undertook certain measures which were necessary for achieving the acceleration.
  2. He incurred extra costs as a direct result of those measures.
  3. Those measures did, in fact, achieve acceleration.
  4. The Contractor also fulfilled his duty to mitigate the additional costs as far as possible.

In the next two posts, we shall discuss more on the brainstorming that we did and the results of that brainstorming, with specific reference to the project in hand.

This post was contributed by Amit Kathpalia FICCP, MRICS. This was originally a LinkedIn post. Amit is the author of Practical Construction Contract Issues Which Are Not Commonly Understood

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