Full Steam Ahead: When to Exercise Caution with Acceleration in EPC Contracts

When it comes to large and complex EPC contracts – and particularly those executed in an oil and gas environment – the age-old phrase “time is money” is often interpreted quite literally.

Against a vast backdrop of competing micro and macroeconomic pressures (including budget constraints, shareholder priorities and geopolitics), parties can – understandably – fall into the “speed over everything” trap. In EPC contracts, this can manifest in the introduction of additional resources, recalibration of project milestones, and even extension of working hours – all deliberate measures aimed at increasing the pace of works and expediting project delivery. Collectively, such measures are commonly referred to as “acceleration”.

How Acceleration Typically Occurs 

Acceleration in EPC projects is not binary and can be driven by a variety of contractual stakeholders (i.e. not just by the employer or the contractor) and typically emerges incrementally rather than suddenly appearing in single, clearly labelled instruction. Requests to increase workforce density or to reallocate resources to critical path activities are common increments that gradually build acceleration of project milestones. Other, perhaps less obvious increments can arrive from the actions of external stakeholders, such as lenders or regulators / government authorities, who have certain skin in the game and reasons for applying acceleration pressure. Consequently, parties often recognise that acceleration has occurred only after its costs and contractual implications begin to surface.  

Acceleration vs Normal Performance 

Crucially, not every effort to “go faster” should be viewed as acceleration, and it is necessary to draw a clear distinction between normal and expected contractual performance, and deliberate accelerated performance. Failure to clearly distinguish between true acceleration and ordinary performance can ultimately open the door for disputes regarding contractual obligation and compensation that should follow any changes made. Accordingly, those measures that are taken simply to comply with existing contractual obligations do not generally give rise to an entitlement to additional time or cost

Acceleration and the Wider Risk Allocation Picture 

Whilst express reference to acceleration may not be universally found in EPC contracts (in the form of its own dedicated contractual provision), it can nonetheless rear its head – often subtly – through other important contractual provisions including (but not limited to) those provisions dealing with variations, programme / milestones, and delay mechanisms. From a practical point of view, this can create some uncertainty as to whether certain measures fall within compensable change, required mitigation, or the contractor’s existing obligations. This uncertainty can often lead to misaligned expectations as to time and cost entitlement (setting the scene for dispute).

Contractual Safeguards  

As a result, whilst acceleration is not always immediately obvious or at the forefront of the contract, it is a concept that sits comfortably within the wider contractual framework, and robust contractual safeguards are therefore critical to avoid unnecessary ambiguity and to lower the risk of disputes. Like other key areas of the contract, parties should look to ensure that any acceleration measures are clearly instructed and recorded appropriately (as a bare minimum). There should be a clear structure as to who has authority to direct acceleration, how such instructions are to be conveyed, and whether they fall within the variation regime or somewhere alongside it. Of course, there is a need for real-time record-keeping, to distinguish between true acceleration and measures taken in fulfilment of existing obligations. Without careful consideration of appropriate safeguards, acceleration can quickly move from a controlled commercial decision to a dispute arena where entitlement to additional time and cost becomes contested.

Concluding Remarks 

When properly managed and navigated, acceleration can have clear and tangible benefits (for all parties). It should not be viewed as a shortcut, but instead, as a deliberate and consciously applied process whereby parties actively engage with one another, according to what has been contractually agreed (and documenting all decisions made). This ethos underpins successful EPC projects, dispelling the notion that faster always means better. Instead, the focus should be on controlled, intentional speed when parties explore acceleration proactively – and not reactively.