acceleration of time extension

NESS



GOD bless you in your succeedings

Guys,

I appreciate your concerns as to whether or not I am providing an Exam Answering Service in this forum.

For a start, I only express my own opinions and every one of my views can be challenged and shown to be wrong. I certainly don’t have all the answers to all of your Claims related questions!!



In addition, I am also in correspondence with Hani outside of this forum - and a number of you will know that I am also in direct e-mail contact with you on a number of subjects outside of this forum, although our initial contact was through PP.



This forum is very much about networking with others, and to my mind it does succeed in that regard.



Cheers,



Stuart

ICQ:



Plz do not ask for moderator for deleting my threads



Its just my opinion and suggesstion.



You may also write . It is public forum not be made for you only. OK...



If u are in trouble u open your own forum.



It is not understandable that why the peopole not bear any critism only want praising praising and TC of others

Dear Hani



I think you need to be a course in UAE from a good Contract Management Consultant then come to this Forum so that you could be able to solved your problem yourself.



NESS : I think your threads are too long and time consuming with repitition the things but comprehensive to some extent so try to be short , It is not a Lecturer forum/room.



If you want to give detailed answer you should sent in detail on his PM or give the link for reference. Here plz be shorted.



Hope you will understand the situation

Dear Hani,

I can fully sympathise with you since I also had a very similar situation a couple of years ago in Brazil, in which the Employer took back the site six weeks after the Contractor started work, the Contractor de-mobilised, the foundation works were substantially increased and then the Contractor restarted some 3 months later.



Without seeing the specifics of your Contract, I can only comment in general of course, but it is clear to me that you are entitled to a substantial amount of time with costs. Your position depends on whether your Contract Price is on a Lump Sum basis or is remeasurable – I assume that it is an EPC Contract on the basis of LSTK (Lump Sum Turn Key). In effect, what you have is a “Suspension of the Works” – though I doubt if the Client has admitted to calling it this in as many words!



Since only some 10% of the Contract Period elapsed before the Contractor had to demobilise, and since the work that he completed in that time (the excavation work) turned out to be completely abortive, I would argue that the Contractor had no opportunity to make any meaningful start to the execution of the Works in the first place. Consequently, I would argue that the 900 day Contract Period can only start after he has moved back on site – i.e., the clock for the full 900 days starts ticking on day 150. The Client will argue that there could have been some off-site work that could have been done, but this view is counter-argued by the fact that the Contractor could not plan or execute anything efficiently since he probably did not know when he could get back on site!



Because of the excessive disruption at the start of the project, and the changes to the foundations and the addition of an extra floor, (isn’t that a bit worrying – having a heavier building and lighter foundations??), I would also argue that the Contractor is entitled to reschedule the Works and submit a new Baseline Schedule to reflect these fundamental changes. (How many floors were there originally?) The start date of the new Baseline Schedule should be equal to day 150 and the new Schedule should reflect the additional work to the superstructure. Although there may be a reduction in the period for the new excavation work, this may well be nominal since a 10% reduction in foundation work does not necessarily lead to a 10% reduction in time required to carry out the foundations.



If the Client does not accept a new Baseline Schedule, but wants to stick to the original one, then you need to add into your schedule all of the delaying and disruptive events (including leads times!), such as the de- and re-mobilisations, the re-excavation work, the additional geotechnical work, the rework and recycle of your engineering of both the foundations and superstructure and obviously the period in which the Works were suspended from day 90 to day 150.



Re your question about the impact of the additional floor, this is in effect a Change/Variation Order and both the time and cost consequences of the extra floor must be reflected in your Contract Price and Contract Schedule. (I sincerely hope that you haven’t missed the deadline for the period of notice if there is one!). The fact that they are on or off the CP is not an issue. Don’t fall into the trap of thinking that because it is not on the CP (at the moment) that you can complete an extra floor within the original time frame!!



With regard to costs, again I would argue that the Contractor should be paid on a quantum meruit basis for the work already undertaken, including the time related overheads for the first 150 days, and that if it is a LS Contract Price, this should stand, but with increases to reflect inflation over the last 150 days on the new Baseline Schedule. The additional cost of the extra floor and any reduction in cost of the revised foundations (but remember that a reduction in the foundation work will also result in an increase in the cost of the re-engineering work for the new foundations!!) should be taken care of by the Contract’s Change/Variation Order mechanisms.

The Contractor must also be paid the cost of the de- and re-mobilisations. The “Suspension of Works” Clause in your Contract should set out the nature and extent of additional costs that the Contractor can claim.



Hani, I hope that I have thrown some light on your problems, but if you need any clarification, please feel free to contact me direct: stuart@rosmartin.com



Cheers,



Stuart



www.rosmartin.com

I was working on a 300km twin pipelines project, it was a unique case in the sense that the project got approval for the extension of time as well as instructions to accelerate the schedule.



Due to some defaults by others, we got an extension of 9 months on the overall project’s commercial operation milestone. The project was twin pipelines system, the client instructed us to accelerate our activities on one line to complete it nearly 9 month before the revised overall project’s commercial operation milestone.



One pipeline was on extension of time and the other pipeline was on acceleration schedule.



We had to break our heads to launch this claim because direct & indirect cost were having postive and negative affects in both cases.

Dear Joe,

Thanks for the direction to the previous postings.

I do agree with you (and I think I said as much in my earlier post) that the Contract Programme is not a Contract Document unless it is specified as such in the Agreement.



I also agree with you that it is unfair to expect the Contractor to incur additional costs in overcoming delays for which he may not be responsible and then have to fight for them later; but if the world was fair, men would ride sidesaddle! ;-)



Cheers,

Stuart



www.rosmartin.com

(Correction)

Hi Stuart,

For the programme being a contract document or not, please refer to the following thread.

http://www.planningplanet.com/forum/forum_post.asp?Cat=7&Top=3128

particularly to David Bordoli’s last post.

I still beleive that the programme is not a contract document unless it is specifically stated so.



As to the case of granting the extension or not, if a Contractor follows your advice to accelerate and claim later, the Contractor will be incurring daily expenses and damages without knowing if he will ever get paid for them, except if he goes to court or arbitration, where he will incur additional costs. This totally unfair.

There should be a mechanism in the contract that forces the Engineer / Employer to releive the Contractor for costs incurred for reasons not due to him.



Joe

Hi Stuart,

For the programme being a contract document or not, please refer to the following thread.

http://www.planningplanet.com/forum/forum_post.asp?Cat=7&Top=3128

particularly to David Bordoli’s last post.

I still beleive that the programme is not a contract document unless it is specifically stated so.



As to the case of granting the extension or not, if a Contractor follows your advice to accelerate and claim later, the Contractor will be incurring daily expenses and damages without knowing if he will ever get paid for them, except if he goes to court or arbitration, where he will incur additional costs. This totally unfair.

There should be a mechanism in the contract that forces the Engineer / Employer to releif the Contractor or costs incurred for reasons not due to him.



Joe

Hi Joe,



It is usual to find the Contract Documents identified in the Contract Agreement (which is separate to the Conditions of Contract; in fact, the FIDIC Conditions themselves will similarly be listed as one of the Contract Documents in the Contract Agreement, along with the Specification, Drawings and perhaps B/Qs.) Alternatively, the Contract Documents may be listed in the Appendix to Tender or form of Tender (see reference to Clause 43.1 of FIDIC Conditions)



In my experience, the Contract Programme (sometimes called the Master Schedule or Programme) is normally also identified and listed in the Contract Agreement as a Contract Document – if it is not listed, then someone (probably a lawyer!) has made a serious omission in drafting up the Contract!! The Documents listed in the Contract Agreement are prioritised under Clause 5.2 of the FIDIC Conditions, and therefore the Contract Programme should be identified and listed (in whatever priority!) under Clause 5.2.



Consequently, I suggest that if your Contract Programme is not identified and included in Clause 5.2 of FIDIC, then you may have a more difficult (but not impossible) struggle on your hands to get the Employer to give the Contract Programme its proper place and authority.



I have personal experience (in the Middle East and elsewhere) of an Engineer being very reluctant (or too lazy) to award an equitable EOT [bit like us Scotsmen opening our wallets…;-)]

You are correct that under FIDIC there is no set time limit upon the Engineer to make his determination, although there is a limit on the Contractor (28 days) by which to give notice and again to give details of his claim (see Clause 44.2). However, the Engineer is required to make such a decision “…having regard to all circumstances.” (see Clause 2.6), and I have argued in the past that the failure of the Engineer to make his EOT determination within a reasonable time is a breach of his duty under Clause 2.6, particularly if this causes hardship (such as additional costs and/or lost time) on the Contractor.



In your case, where the Engineer is too lazy (or scared!!) to properly grant an EOT, I would make him part of the formal problem, and you should give notice under Clause 44.1(e) that his failure to award the EOT is likely to affect the Contractor’s rights (to time and money) as noted in Clause 2.6(d). This brings the inaction/failures of the Engineer into the open and this alone can get things moving, since his inaction/failures may well hurt the Contractor and increase the Contractor’s entitlement to more time and money. (and ultimately the Employer will have to pay extra for his Engineer’s recalcitrance!)



This may all lead into a claim for Constructive Acceleration; my advice (especially if you are likely to incur LADs if you don’t accelerate), would be to accelerate as ordered, but continuously keep giving notice under Clause 44 and submit your reasons and costs (see Clause 44.2) at intervals well with in the 28 day limit (probably weekly if you can!).



I am well ware of the pressure exerted by Employers in this regard, but would suggest that pressure from the Contractor’s side can also be made in terms of ensuring that you present your claim under the Contract for time and money on a virtually continuous basis – just don’t miss any of the notice deadlines!!



Hope this helps,



Cheers,

Stuart



www.rosmartin.com

Dear Stuart,

Thanks for your elaborate reply.

Let me note first that under FIDIC, the programme of works is not a Contract Document. The "Time for Completion" as stated in the Contract, or as extended under Clause 44 is the only reference to time in the regular FIDIC.



I would like to quote from Corbett’s legal guide to FIDIC:

"there is no power given to the Engineer under the Contract to order acceleration at the Employer’s expense.

and "It is therefore necessary for a Contractor to demonstrate a variation of the contract as distinct from a variation to pursuant to the contract. He must show that the Employer and the Contractor have agreed that the Contractor should accelerate and that the Employer would pay him so to do".



However, the problem arises, and it is a very common one, when the Engineer is reluctant to determine an extension since he has no time limit to do it, and he orders acceleration. The delay is not acknowledged yet by the Engineer to be a non-Contractor’s delay. In that case, what would the Contractor do: accelerate and claim for costs later, or refuse to accelerate until an agreement is reached?

Let me tell that in the middle east, extension of time is very very difficult to obtain, due to the enormous pressure made by Employers.



Interested to know your views and experience.



Joe

Good interpretation of Clauses with respect to compensation of EOT for a Conntractor - very helpful in some other cases also

Dear Joe,



Under Clause 2.5 of FIDIC (Red Book), the Engineer – on behalf of the Employer – is allowed to issue instructions in writing to the Contractor, (and if given orally, to be confirmed in writing by the Contractor) and

“…the Contractor shall comply with such instruction.”



This assumes that the Engineer is entitled to issue said instructions under his authority to do so as set out in Clause 2.1; in the case of issuing instructions related to acceleration it would be reasonable to assume that the Engineer would have this authority.



Under Clause 46.1, where the Contractor is not maintaining adequate progress to achieve timely completion and where there is no excusable delay, then the Engineer (again on behalf of the Employer) is required to tell the Contractor that he is in delay, and the Contractor is then required to

“…take such steps as are necessary…to expedite progress so as to comply with the Time for Completion.” [i.e. accelerate !!]



In such circumstances, the Contractor is not entitled to any extra payment, since this relates to a situation for which the Contractor is responsible for the delay (non-excusable delay).



Is your predicament, however, related to a situation in which there is no delay (at least not one caused by the Contractor) and the Employer simply wants to have his project completed earlier?

If this is the case, I can see no provisions in the FIDIC Conditions that allow the Employer to instruct the Contractor to accelerate “just for the hell of it!” Of course, this does not prevent the parties from reaching mutual agreement on Acceleration Programmes on the basis that the Contractor will accelerate, provided that he is paid his extra costs – such agreements take place all the time, one way or another!



But under FIDIC, I would suggest that the Employer has no right to instruct the Contractor to accelerate without agreed compensation. Note that Clause 41.1 of FIDIC requires the Contractor to start the Works as soon as possible after notice to commence, and that the Contractor

“…shall proceed with the Works with the due expedition and without delay.” [in other words – in accordance with the agreed Contract Programme!!]



In addition, under Clause 8.1 of FIDIC, the Contractor is obliged

“…with due care and diligence, …(to the extent provided by the Contract), execute and complete the Works…in accordance with the Contract.”

This also means that the Contractor is required to carry out the project in accordance with the agreed Contract Programme (assuming that it is formally part of the Contract Documents), and as such, neither party can unilaterally change a Contract Document. So in this way, the Employer is actually prevented from and not allowed to instruct the Contractor to accelerate, since the Contractor, under Clause 8.1, is only required to carry out the Works in accordance with the Contract Documents, i.e., including being in accordance with the agreed Contract Programme.



I hope that this helps a bit. If it is unclear of if you need any further clarification, please feel free to contact me direct: stuart@rosmartin.com



Cheers,

Stuart



www.rosmartin.com

Dear Stuart,



Let me rephrase the question:

Is the Contractor under an obligation to accelerate if the Employer instructs him to do so?



If you are familiar with the FIDIC red book, I would like to know specifically if under this form of contract, the Employer has the right to instruct acceleration, and under which clause.



Thanks



Joe Mansour

Dear Guest,

regarding the question about the Client’s right to force acceleration, the answer (as usual!) lies in te detail of the specific Contract!

I have seen Contracts where the Client is specifically allowed to instruct acceleration where he feels that the Contractor is in delay.

In addition, I would also suggest that the Client often has an implied entitlement under the Contract - even if it is not specifically identified as such - to instruct the Contractor to accelerate. This implied right could be viewed as being the Client’s right to protect his project investment, though such an implied right would less in the case of an LSTK Contract, where the Contractor has full responsibility.



I am not sure that a Contract Addendum would be the correct vehicle to impose acceleration.



In the final analysis, however, the real issue is not who instructs the acceleration, but the cause of the need to accelerate and who is going to pay for it!



Hope this helps,

Cheers,

Stuart



www.rosmartin.com

Dear Hani,

I was involved in a project in the USA where the Contractor claimed 5 months EOT, but the Client granted only an EOT of 2 months. This still left a "shortfall" of 3 months, and in order to avoid LAD’s etc., the Contractor had to implement constructive acceleration measures, even though an EOT had been granted.



Such situations are not entirely unusual, though I agree that in certain parts of the world Clients/Owners are very reluctant to grant any amount of EOT, even when the Contractor has a clear entitlement under the Contract!!



Cheers,

Stuart

www.rosmartin.com

Hi Guys,



One important question is to be asked:



Has the Client the right at all to order acceleration under the Contract?



Some say yes, others say no but it has to be agreed on under an addendum to the Contract.



What would you say?

Stuart,



I agree but still you have to evaluate the difference between the EOT granted and EOT requested to claim for constructive acceleration.



proj_planner

proj_planner,

To answer the question in your opening line, it is possible for a Contractor to be granted an EOT, but for it to be insufficient or incorrect; i.e., the Contractor is really entitled to a period longer than that given in the EOT.

In such a case, the Contractor could well be faced with having to engage in constructive acceleration measures, even though an EOT was granted.



Stuart

www.rosmartin.com

The point is if you are granted an EOT, what acceleration can you claim for? Whereas if you are denied the EOT for an excusable delay, acceleration is the only way to complete the project on last agreed completion date, which the Client insist to respect.



A contractor’s claim for constructive acceleration should meet the following criteria:



The delay is a result of causes that would entitle the contractor to time extension under the contract



The contractor requests time extension for the delay in a timely manner, in accordance with the contract



The owner fails or refuses to grant a time extension to the contractor



The owner requires the contractor to complete the work in accordance with the original schedule or indicates an intention to penalize the contractor for failing to complete the work in accordance with the original contract schedule



The contractor then endeavors to accelerate by working additional hours, by committing additional resources, or by other means



The contractor incurs additional expense in carrying out these acceleration efforts



Cheers,



proj_planner

I think you will find that for a claim for constructive acceleration to be valid, the Contractor is required to claim for an EOT and for that request to be either denied or issued too late to be effective!



Emelyn - you posted some time ago that your revised completion date was 15 August, which was last week. I am curious to know if you completed in time, or did you have further delays that prevented you from completing?



Stuart

www.rosmartin.com

As you are a subsidiary company it would probably be better to go straight for the acceleration claim since you know the completion date is fixed. As part of your claim for acceleration you would need to show that the delay is valid using standard EOT principals.



This would be seen as a proactive move and probably viewed more favorably by the client as it would save him the stress of thinking he isnt going to get his mall open in time.

Ms. Martinez,



I think it is best to submit a request for an extension of time first and when it is denied follow it up with a constructive acceleration claim based the EOT claim. In case the EOT is granted, you can still claim for disruption or prolongation (whichever is applicable).



proj_planner

Emelyn,



I sent you two e-mails yesterday to your yahoo e-mail address. Did you receive them OK?



Cheers

Stuart

www.rosmartin.com

Hi Emelyn,

Constructive Acceleration is defined by the US Corps of Engineers as

"An act or failure to act by [Employer] which does not recognise the Contractor has encountered excusable delay for which he is entitled to (an EOT) and which required Contractor to accelerate his programme in order to complete the contract requirements by the existing contract completion date. This situation may be brought about by [Employer’s] denial of a valid request for a contract time extension or by [Employer’s]untimely granting of a time extension."



The best reference that I have found on Constructive Acceleration is in Keith Pickavance’s book "Delay and Disruption in Construction Contracts".



I have been successfull in running this argument on a few occasions, but it is easier to win the argument if you have a contract that is more American based, since there is a bit of Americam case law that supports this idea. It is only catching up very slowly in Europe...but if you have a good convincing case, then the logic is faultless.

Hope this helps,

Stuart

www.rosmartin.com

Emelyn,

It sounds to me as if you may have an entitlement to Constructive Acceleration. This happens when the Contractor is caught between a rock and a hard place! (nothing new there!!)

If you have an excusable delay, are entitled to an EOT but it has been either denied to you or given to you too late, and if your only recourse is to accelerate in order to meet the due completion date, then you may have a case of Constructive Acceleration. This is a concept now being accepted by arbitrations and courts in a number of locations.

Cheers,

Stuart

Which kind of contract it is? (BOQ, reimbursable, etc ...)

Which main rules are applicable? What is defined in the special condition?



Your baseline was in line with the 15May04 completion date?



The opening data is something I understood not easily negotiable as they already set up all, and could be an image problem.

Opening a shopping centre on a certain time is a marketing problem also.



How are the relationships with the Client?

May be a more flexibility and not traditional approach must should be adopted.

If You can not real meet the actual completion try to propose, to the Client, at the same time the two schedules.

One with the more time required (Nov 04) and the recovery plan (Aug 04) together with the cost implication to meet this completion date.

At the end the Client will make his cost/benefits analysis and determine what ever is better for him, to pay the acceleration or allow You more time.

I am a bit confused with all your dates, basically, if the opening is on a certain date, and you prove time entitlement beyond it, then to be able to achieve the opening date, you need say, extra resources, overtime etc. All these, you need to substantiate and prove.

I am sure most of us have come across something like this, again, at critical stage towards the opening, keep ALL records properly.

Good Luck



Abdullah Haji Hukum

You need to establish your entitlement to time extension, then, you argue on the difference between time granted and your entitlement, and also, when you actually complete the works. From here only the acceleration can be established.

Again, the Client usually does not recognise this, unless you can substantiate it convincingly.



Abdullah Haji Hukum

First you will have to establish Extension of Time and if this Extension is granted/approved then you will be entiteld for the acceleration claim accordingly.