Mitigation, Acceleration and Constructive Acceleration

When delay events occur so does the potential for mitigation, acceleration, and constructive acceleration as Contractors and Employers look to recover a program. But what exactly are they?

Mitigation aims to minimise the effect of a delaying event without spending additional money or resources.

Mitigation is expected where possible and if not carried out may leave Contractors unable to recover costs incurred by a delay.

This is reinforced by several standard forms of contract clauses regarding mitigation:

AS4300 1995:

"In determining a reasonable extension of time for an event causing delay, the Superintendent shall have regard to whether the Contractor has taken all reasonable steps to preclude the occurrence of the cause and minimise the consequences of the delay."

AS2124 1992:

“The Contractor shall take all reasonable steps to limit, reduce and otherwise mitigate any loss or damage and the Contractor shall, unless the Superintendent otherwise directs, take such emergency action as may be required to mitigate the loss or damage.”

FIDIC 2017:

"All reasonable endeavors to minimise any delay in the performance of the Contract."

To paraphrase, to claim an extension of time (EOT), it is a condition precedent of the Contract that reasonable steps are taken to mitigate the potential impact of the alleged delaying event.

The execution of the planned scope of work in a shorter time than the originally planned duration. Where Mitigation only arises if a delay event occurs, Acceleration can be implemented at any time.

Acceleration could be used to:

• recover original project timing following a delay
• to meet a revised completion date

Acceleration usually incurs extra cost and should be first agreed upon by Employer and Contractor prior.

Before agreeing on the acceleration strategy (and cost), an entitlement to an EOT should be determined.

Constructive Acceleration occurs when an Employer fails to recognise the Contractor has encountered Employer Delay and needed to accelerate its progress to complete the project on time.

An EOT should be agreed prior to acceleration to enable the Contractor to recover costs.

The SCL Protocol defines constructive acceleration as:

“Acceleration following failure by the Employer to recognize that the Contractor has encountered Employer Delay for which it is entitled to an extension of time and which failure required the Contractor to accelerate its progress in order to complete the works by the prevailing contract completion date.”

What if the Contractor and Employer do not agree on an EOT?

In the case of Motherwell Bridge v Micafil[3], Motherwell accelerated its scope of work to accommodate the earlier delays of Micafil so the Date for Completion could be maintained.

Motherwell notified Micafil of the 3-week critical path delay and provided an acceleration strategy. Motherwell were not instructed to accelerate, nor where they given an extension of time. Rather, Motherwell, at its own cost, accelerated its program.

His Honour Judge Toulmin awarded Motherwell an EOT to the Date for Completion, had it not been for the accelerated program i.e., after the actual Date of Completion. Motherwell were also entitled to claim the associated prolongation costs between the Date of, and for Completion. Interestingly, Motherwell were not entitled to recover the associated acceleration costs.

The Motherwell Bridge v Micafil case highlights that, although Motherwell were entitled to an extension of time, they were not entitled to acceleration costs; even though Micafil agreed to the proposed acceleration strategy, they did not issue an instruction to accelerate.

In the case of Perini Corporation v Commonwealth of Australia[4] Perini submitted several EOT claims that were subsequently rejected by the Director of Works. Moreover, the Director of Works took an excessive amount of time to make his decisions regarding the EOT claims.

Perini accelerated their works to meet the Date for Completion and to avoid liquidated damages. Justice Macfarlan found that the failure of the Director of Works to respond to Perini’s EOT claims in a reasonable time was a breach of contract.

Perini effectively constructively accelerated their works and they were successful in claiming the associated acceleration costs.

1. Failure by the Employer to grant an EOT, where it should have, does not necessarily give rise to a constructive acceleration claim.
2. When a Contractor does accelerate, it is not entitled to claim the associated costs unless explicitly directed to accelerate as a result of an Employer delay event(s).
3. The ‘wait and see’ approach is not the best way to manage EOT claims. EOT claims should be assessed as close to the time that the delaying event(s) occurred.
4. Prior to implementing any acceleration measures to expedite an Employer related delay, the Contractor should seek the approval of the relevant EOT claim.

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Paul