Hi,
Looking for some NEC contract advice and some broader advice on acceleration.
We are acting as a Contractor under an unamended NEC4 Option A contract. We have been asked to provide a quotation for acceleration under 36.1 which essentially involves bringing the completion date in to happen sooner.
The contract has option X7 - Liquidated damages applied and a subcontract completion date noted.
Our concern is that if we price for the acceleration, we essentially bring the completion date forward and thus Liquidated damages penalties will happen earlier in the process. It seems counter intuitive to willingly accelerate and then pull your late completion penalties in. Is there a way 2 new dates can be created:
- An accelerated completion date of X (No LD’s applied)
- The original subcontract completion date of X (LD’s applied)
We don’t mind LD’s on our original date as have confidence, but wary of “slitting my own throat” by agreeing to accelerate and bursting the new date thus exposing us to delay damages which are 25K per week.
My gut tells me we should decline to accelerate, keep the original completion date as is, LD’s apply from there and we then actually accelerate at our own cost to finish earlier before winter hours kick in and delay the available daylight to work on site.
Appreciate any thoughts on the matter.
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A simplistic approach, in my view, would be to include the LDs’ estimated cost in your acceleration quotation so that if your fears materialised no harm would have been done.
Do not forget that the Client seeking acceleration is doing so because it is trying to achieve something and is willing to pay a price for it; if LDs were waived for the new/earlier Completion Date, that would mean that you (the Contractor) could breach this obligation without any consequences, whilst the Client would have already paid you for the acceleration.
Lastly, I don’t think that your scenario of accelerating at your own cost is beneficial to your financial health, but I’m sure the Client would more than welcome it.
Having said the above, it wouldn’t be unrealistic if you agreed a waiver of the LDs for the earlier date, in order to spare the Client of the LD costs in your acceleration quotation. It is a matter of negotiation and it would be a variation to the Contract (usually agreed under a Deed of Variation), to be signed by both Parties (see clause 12.3).
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Thank you sir. Great response. I think we’ll cost the LD’s in as the client has previously intimated that they expect the LD’s to be applied to the earlier accelerated completion date. I have very little faith that we’ll achieve this new accelerated date if i’m being honest.
Could the quote be rejected and the client then remains at the old date? thus we lose the opportunity to accelerate and make use of the light summer days…
Tough one.
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A word of advise, be careful with the wording of the acceleration agreement as to whether its only payable if achieved
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