Constructive Acceleration

Painting Abstract PhotoI have a painting contractor client who recently found itself upside down on a job that had a rigid schedule and liquidated damages penalties for late project completion.[1]  As is often the case, this painting contractor was one of the very last contractors to complete its work on the project.  In order to paint, there must be complete footings, floors, walls, and ceilings.  On this project, there were delays and schedule problems early in the project.  Long before the painting contractor even arrived on the job site.

These delays had the effect of significantly compressing the painting contractor’s schedule.  What was originally scheduled for three weeks with two crews of two painters, had to be completed in one week.   In order to accomplish this compressed schedule, my painting contractor had two weeks of down time for his crews and then was required to add two painters and a full-time supervisor to its crew and have all six painters work twelve hour days for five days and ten hour days for the remaining two days.  In addition, the painting contractor had to purchase additional painting equipment for the two additional painters because all of the existing spray equipment was on other jobs.

The costs to complete this job were about double the amount of the original bid.   This circumstance is called constructive acceleration.   Constructive acceleration occurs when there is a delay and an owner unjustifiably denies a contractor’s request for a time extension, requiring the contractor to finish the project by the specified completion date.

Constructive acceleration has five elements.  In order to prove a claim for constructive acceleration, a contractor must show (1) an excusable delay occurred, (2) the contractor requested an extension of the contract time, (3) the owner or general contractor denied the extension, (4) the owner or general contractor “ordered” the contractor to accelerate, and (5) the contractor actually accelerated, resulting in extra costs.[2]

In the case of my painting contractor, there was no question that there was an excusable delay.  There were no finished walls to paint on the date that my contractor was supposed to start painting.  With that said, there are many times that whether a delay is excusable is questioned.   Encountering a differing site condition, unexpected consequences of a weather condition or unexpected productivity problems related to unique design details in the project often invoke disputes about whether the delay is excusable.[3]

The second requirement of constructive acceleration requires the contractor to request an extension of time.  Most standard construction contracts contain clauses requiring requests for time extensions be submitted to the owner or general contractor within a prescribed time.[4]   Further, many, if not most, governmental contracts have mandatory notice provisions for contractor claims in procurement manuals, statutes or regulations.  It is always best to make all requests for an extension of time in writing.  This document may become the centerpiece of proof when calculating the damages for acceleration.

In constructive acceleration, it is common for the requirements that the owner or general contractor deny the request for extension and “order” the contractor to accelerate to blend together.  Practically speaking, it is rare that an owner or general contractor will expressly order a contractor to accelerate.  It is much more common that the owner or general contractor will deny a time extension request and then point to a contractual liquidated damage provision or express concern about lagging progress on the progress.  Sometimes, an owner or general contractor will even state that “a time extension will not be granted now, but the owner will consider an extension if the contractor is unable to meet the original schedule.”   These examples are tantamount to “ordering a contractor to accelerate.

Finally, proving that the acceleration resulted in increased cost to the contractor is critical to the success of any acceleration claim.  There are a number of methods to prove damages due to acceleration.  One method of calculating the damages for the acceleration is the Total Cost Approach.  The Total Cost Approach compares the total actual costs of the project to the estimate or original bid for the project.  The problem with this method is that there are variables such as whether the contractor’s estimate or original bid was reasonable and whether the contractor contributed to the increased costs that can invalidate the resulting cost increase.  This concern has led some courts to refuse to allow the Total Cost Approach to be used when calculating acceleration damages.[5]

Another method for proving damages for acceleration is to use Industry Standards to show damages.   Industry standards from industry groups like the National Electrical Contractors’ Association (NECA), the Mechanical Contractors’ Association of America (MCAA), R.S. Means and the Business Roundtable produce standards and handbooks containing standard productivity rates.  These industry productivity standards can be used as a baseline benchmark and used for comparison against actual productivity on a job.  The difference would be the basis for acceleration damages.

Another method of measuring damages is called the Measured Mile Approach.  This approach compares the level of labor productivity during the accelerated work period to labor productivity during a normal period, the difference being the basis for acceleration damages.

No matter how damages are arrived at, the contractor should not forget to include profit and overhead in the acceleration claim.

In the case of my painting contractor, after a little push back from the owner and some of the contractors involved in the delay, the contractor was able to recover some additional monies that helped make the project more profitable.  The best decision by the contractor was to involve counsel early, before substantial project completion, so that invoices and requests for progress payments included the additional amounts caused by the constructive acceleration.

About the Writer:  Patrick Noaker is a business attorney in Minnetonka, Minnesota who aggressively represents construction contractors in the courtroom and arbitration.    Find and follow him at NoakerLaw.comLinkedInFacebookTwitter and Pinterest.

[1] The painting contractor in this article is a compilation of a number of construction clients represented by Noaker Law Firm LLC in order to preserve the confidentiality of each client.

[2] Norair Eng’r Corp. v. U.S., 666 F.2d 546 (Ct. Cl. 1981).

[3] Murdock & Sons Constr., Inc. v. Goheen Gen. Constr., Inc., 461 F.3d 837 (7th Cir. 2006).

[4] E.g. AIA A201 – 1997, paragraph 4.3.3.

[5] See Amelco Electric v. City of Thousand Oaks, 27 Cal. 4th 228, 115 Cal. Rptr. 2d 900, 38 P.3d 1120 (2002);

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