Constructive Acceleration is an established concept in the US. Whilst not an approach which is ordinarily pursued by EPC Contractors (‘Contractor’) within the Asian market it has recently been stated as the basis of entitlement for additional costs on some projects in Malaysia and  Singapore. This paper discusses the concept of Constructive Acceleration and why it has no place in connection with those contracts in Malaysia and Singapore with which it has been raised.

Every contract sets out the obligations and responsibilities of the parties relative to  performance, work execution and contractual relationship. In situations where the Employer has an obligation under the contract which he, or his Contract Administrator (‘CA’), fails to discharge appropriately, the Contractor may inherently be forced to take a constructive approach and continue to perform the terms of the contract; never mind that it is outside what was originally contracted for by the Contractor. The ‘required performance’ on the part of the Contractor is often referred to as a ‘constructive change’ by US EPC Contractors and others.

The most common example of constructive change, which is also potentially the most  contentious, is Constructive Acceleration which occurs where the Employer or CA fails to grant an appropriate extension of time (‘EOT’) for excusable delay(s) forcing the Contractor to accelerate works to complete within the current time for completion. The Contractor would argue that he is forced to take acceleration measures to avoid the imposition of liquidated damages in the face of what potentially might have become an unachievable contract time for completion.

Whilst an established concept in the US, Constructive Acceleration provides no basis of entitlement in Asia

Derek Nelson, Partner