Who Owns The Float In A Construction Programme
Experienced contractors and construction claim analysts know that practically time always is of the essence on a project, regardless of what the contract says. This is particularly true on today’s complex construction projects where almost every line item or specified scope of work is governed by an ever-evolving CPM time schedule.
A typical time schedule dictates the start date of works, its duration, and when it must be finished to maintain the ultimate finish date. However, a CPM schedule also typically includes certain non-critical work items that have an element of “float/slack” that can be utilized before the completion of those activities impacts the overall critical path or finish date.
Given that time and associated delay claims can lead to some of the largest issues on a project, an interesting question arises concerning “float/slack” in the time schedule; namely, who owns this float?
As a general matter, the float can be defined as the amount of time that a construction project activity can be delayed without affecting the project finish date. If a project activity is said to have zero float, any delay to that activity will result in a corresponding delay to the project finish date (this is a critical path activity) unless recovery measures are taken.
If an activity has a positive float, that activity can be delayed until the float reaches zero, without delaying the project finish date. Thus, the float can be a valuable asset to the extent it can be used to absorb or offset a delay in a zero float activity and can serve to recover the CPM schedule finish date.
Understanding that float is a valuable asset, the question becomes, which party to the project is entitled to control or use the slack/float? As will be discussed further below, the answer to this question can, and should, be answered by looking at the language of the contract between the employer and Contractor. In the absence of controlling language in the contract, however, there generally are three competing arguments concerning who owns the float. The three arguments are:
1- The Contractor owns the float.
2- The Owner owns the float.
3- The project owns the float. The merits of each argument are discussed in turn below.
1-The Contractor Owns the Float
The widely known argument, and perhaps the general rule, is that the Contractor owns the float. The logical basis for this argument is that the main contractor typically creates the CPM time schedule, determines the sequence of construction project activities, and thereby creates the slack/float. If the main Contractor/subcontractor created the float through its own sequencing, and can directly impact the float based on the performance of its work, the Contractor should own the float.
Furthermore, it is often assumed that the Contractor is the party with the most risk relative to any delays & is therefore in the best position to responsibly utilize the float. In essence, if the Contractor created float through its scheduling/sequencing activities, the Contractor should be permitted to utilize that float to offset any delays experienced in zero float activities.
The general rule here is that a contractor can’t recover delay damages where he and the owner are jointly responsible for the delay. Except this, any contractor-caused delay will bar his claim. However, the courts have refused to apply this rule where the contractor caused delays that occurred on items that didn’t lie on the critical path. The important implication is that the contractor had the right to delay those items to the extent of their float and thus that the float belongs to the contractor.
2-The Employer Owns the Float
While the general view is that the Contractor owns the float, there is an argument that the employer should own/control the float. This argument is based on the assumption that the employer has paid for the Contractor’s services, the CPM schedule, and any resulting float as part of the cost of the construction project.
Since it theoretically has paid for the project sequencing and management, the employer argues that it should be entitled to control float generated as a byproduct of those efforts to reduce the employer’s costs and control the progress of the project. Similar to the Contractor, an Owner can incur significant additional costs if its project is delayed and thus the employer has an interest in making sure any float is used to its benefit.
Even further, proponents of this argument take the position that by allowing the Contractor to use float, the employer is granting the Contractor a time extension when the Contractor has not actually been delayed or otherwise entitled to such an extension.
Of course, this argument ignores the fact that using float doesn’t actually extend the Contractor’s time for completion of the project. Regardless, there is an argument that the employer should be entitled to the most efficient performance of the work possible by controlling the Contractor’s use of float.
3-The Project Owns the Float
The third argument for float ownership is that neither party should exclusively control the float. Under this theory, the construction project should be the beneficiary of the float and it should be used on a first-come, first-serve basis by whoever needs the float.
If the Contractor needs to use the float to recover the time schedule due to a delay in a critical activity, the Contractor can use the slack/float. If the employer needs to use the float to ensure the efficient completion of a non-critical work item to obtain a financial benefit to the project, the Owner can use the float.
However, the key to this argument is that the parties use the float in good faith, for the benefit of the project. For instance, the Contractor shouldn’t claim a time-related change order for an item when float time exists to compensate for the time that otherwise would be needed. Such allocations of float don’t advance the interests of the project and therefore are not legitimate under this view of float allocation.
Given that there isn’t a significant amount of case law on the three arguments discussed above, and respective jurisdictions may treat the issue differently, the best way to address float ownership is through specific language in the contract between the Contractor and employer.
Obviously, you can minimize the risk of the dispute by drafting a provision that specifically provides that one or the other party specifically owns the float. Alternatively, some common clauses addressing the issue of the float are so-called “joint ownership” and “non-sequestering” clauses.