You are on page 1of 6

PMI Virtual Library © 2010 Walied Ali Abdeldayem

What Construction Project Managers Need to Know About Float Ownership
By Walied Ali Abdeldayem, PMP, ACIArb


loat ownership has been the subject of hot debate for a long time. Whether float is owned by the contractor, the owner, or the project, is still an ongoing argument in many countries around the world. In this article, the focus is not about which party is correct; rather, the focus is more about the practical implications of float ownership. In my view, the debate has become more of a hypothetical debate, with little association with reality. Should the question be who owns the float or, what does float ownership mean, and what are the implications of such ownership? Also, many project managers overlook the contract clauses that regulate the utilization of the float and engage in unnecessary debate based on irrelevant assumptions or past experiences, which do not apply to the project at hand. If many of the implications of such a debate are already

regulated in the contract in some way, shouldn’t the focus be on the specific situations that may give rise to such disputes? What is Float? Generally speaking, float is the period during which a noncritical activity can be delayed. There are a few types of float; the most important types are the free float and the total float. The free float is “the amount of time that a schedule activity can be delayed without delaying the early start date of any immediately following schedule activities” (PMI, 2008, p. 435). Free float is used mainly for resource leveling (smoothing); in other words, easing the high peaks by rescheduling the activities so the resources become more uniformly disrupted. The most important type of float is the total float, which is “the total amount of time that a schedule activity may be delayed from its early start date without delaying the project finish date or violating a schedule constraint” (PMI, 2008, p. 451). Total float is the one that is vital for project completion and therefore is the focus of this paper. For the purpose of this paper, the term float is used to refer to total float. Aspects of the Arguments The debate is fierce, because each party (i.e., the contractor and the owner) understands the vital role of float to the project. Generally speaking, each party believes that the exclusive ownership of float is in the party’s best interest. This lays the foundation for an adversarial relationship between parties, especially if the contract does not regulate the float utilization between parties. The float ownership has two major aspects: the first is the ability to directly or indirectly

Should the question be who owns the float or, what does float ownership mean, and what are the implications of such ownership?

Float allows the contractors the flexibility to perform their duties properly and effectively meet the completion date. It might be surprising to learn that there are numerous disputes about this. and the second aspect is probably more interesting and relates to the entitlement of extension of time (EoT) and the application of liquidated damages (LDs). This view is very similar to the view that the project owns the float. & Hillman. if delay events affected non-critical activities. most of the contractors’ schedules were prepared in a simple bar chart format (Wickwire. & Hillman. Moreover. & Parvin.” If such a clause with that explicit wording is not stated in the contract. The proponents of this view argue that the contractor was the party who developed the schedule and the float is an attribute to this schedule. by stating that only 30% of the activities can be critical (Wickwire. In extreme cases. which did not allow for easy and practical monitoring of the float and tracking its consumption throughout the project. especially in the early days of delay claims and before the widespread use of sophisticated critical path method (CPM) software packages. it also helps the contractor plan the work. A recent survey in the United Kingdom revealed that 80% of the respondents assumed that the contractor owns the float. A Contract Perspective Many practitioners expect to find a clause in the contract that says. and therefore it is the contractor’s own contingency for any unforeseeable events. previous court cases. the majority of those surveyed were contractors (Harris & Scott. From this point of | © 2010 Walied Ali Abdeldayem 2 . the “non-sequestering of float” clause prevents the contractor from preparing a baseline schedule with overstated duration to reduce float. 1991). 2003). Driscoll. for example. Most contracts deal with the matter through the inclusion of what is referred to as “joint ownership of float” and/or “non-sequestering of float” clauses. 2003). not surprisingly. they go further to suggest that if an owner risk event occurred in a non-critical activity. some commentators suggested that the contractor should be able to sell the float to the owner (De La Garza.influence the construction methodology and/or sequence once the project execution has started. despite having “joint ownership of float” and/or “non-sequestering of float” clauses in the contract that suggest otherwise.PMI. the survey results should have been different (i. There are three main views on the matter: some argue that the entitlement to utilize float is for the contractor. about 20 years ago. The proponents of this view argue that float is contingency time for the project. This inaccurate perception gives rise to unnecessary disputes between parties. that float is owned by one of the parties. On the other hand. some believe it is only for the owner. it is a risk management tool against delays caused by an owner risk event. each party asserts (or claims) the float ownership rights to be his own. it is not the only way to regulate the float usage between parties. 2001).e. and others feel that it is owned by the project.. Driscoll. in explicit wording. This view still has its appeal in some parts of the world. The “joint ownership of float” clause indirectly indicates ownership by stating that no time extension or other compensation will be granted for delays to noncritical activities until the delay exceeds the available float (Householder & Rutland.1 These views are discussed in more detail hereinafter. should have been similar to the contract view). therefore. based on either past experience in other projects. Given that most forms of contracts include “joint ownership of float” clauses. “Float is owned by the contractor (or the owner). because some project managers presume that the float is owned by the contractor (or the owner) and manage the project based on that inference. This inconsistency highlights the fact that many practitioners fall into the traps of their own assumptions and ignore what the contract says about the matter. this view is not included in the discussion. The View that Float is Owned by the Owner Another side of the argument is that the float is owned by the project owner. or just according to their own personal preference and view of the debate. 1990). the contractor should be given an extension of time to maintain the same level of contingency before the event occurred. hence. Although such an explicit clause can be found in some contracts. Vorster. Hurlbut. 1 The View that Float is Owned by the Contractor The view that float is owned by the contractor implies that the contractor is entitled to utilize such float for his or her own risk events and recovery rescheduling. for example. This traditional view once had wide acceptance among practitioners. At that time. their only effect is reduction of float. and the differences don’t have noticeable implications for the purpose of this paper. which might not apply to the project at hand. A fourth view is that the float is a shared resource that is not owned by any party. PMI Virtual Library | www. Hurlbut.

. This view started in the United States around 1974 (Wickwire. the resource utilized on the correspondence activity can be leveled to minimize the difference between the minimum and maximum resource usage in the resources histogram (S-Curve). Float is not for the exclusive use of any of the parties and it serves whoever needs it first as long as it is used in good faith. which may cause a loss of credibility in his or her entire schedule. v. so by overstating durations. When a positive float is identified.. The proponents of this view argue that the owner has paid for the project and should be able to control the float to reduce costs and control progress. 2 Float is a risk contingency that can be used to reduce the risk of delay to the project completion.S. DOTCAB (1990) – Ealahan Electric Co. the contractor risks losing float and minimizing the opportunity to complete on time. for example. activities tend to fill the time allowed for them. Second. Inc.2 The reason for the shift of views in the United States could be due to the widespread availability of software packages. Also. all are cited in (Wickwire. already contain risk allowances by the means of using any estimation technique that the contractor finds suitable. GSBCA (1975) – Dawson Construction Co. hence. finally. and the most modern forms of contracts indirectly take this view by building the clauses to regulate the float utilization rights. the down side of this is that it may result in the contractors attempting to sequester the float if there is no “non-sequestering of float” clause in the contract (e.g.. Inc. v. and should.. & Hillman. in fact. 2003). and most expected durations. To avoid disputes about the hidden risk allowance in the planned durations. have included clauses that require the contractor to demonstrate that the delay. DDC (1990) – Williams Enterprises. In any case. United States. Strait Manufacturing & Welding Inc. (1990) – Weaver-Bailey Contractors. maximum. It is not fair or reasonable to grant the contractor an extension of time while the contractor did not. most U. such practice is forbidden and is an explicit reason for the engineer to reject the schedule and its updates. Alfred McAlpine Construction (1999). First. The float can also be used to re-sequence activities to mitigate delays and avoid or reduce disruption (Keane & Caletka. And. the contractor who practices such tactics would face huge difficulties in defending the durations and their entitlement to EoT when a dispute arises (Keane & Caletka. overstate durations in the attempt to reduce float). the float serves as a risk contingency for the entire project and should not be for the exclusive use of either the contractor or the owner. Therefore. in other words. which allowed for accurate calculations and tracking of float consumptions. the United Kingdom. 3 See Ascon Contracting Ltd v. PMI Virtual Library | www. | © 2010 Walied Ali Abdeldayem 3 . 2003). Cl. that this rationalization overlooks the fact that the estimated activities durations as planned by the contractor could. Driscoll. some contractors use the program evaluation and review technique (PERT) to forecast the activities durations. & Hillman.3 and other countries around the world. some forms of contracts encourage the risk allowances to be stipulated in the schedule as distinctive activities such as the NEC3 (Keane & Caletka. 2008). Supporters of the view that the project should own the float argue. suffer any delays to project completion. The View that Float is Owned by the Project This view basically suggests that the float is owned by the project or. Ct. Driscoll.without affecting the project completion.. Hurlbut.affected activities on the critical path of the project be entitled for EoT (Wickwire. if the durations are ridiculously and unreasonably long. it is owned by neither the contractor nor the owner. Float as a Risk Contingency The main purpose of float is to identify the critical and non-critical activities. For example. Driscoll. which is effectively a “joint ownership of float” clause.PMI. See. Hurlbut. in addition to the requirement for the contractor to submit frequent schedule updates. it is highly advisable that the contractor resist the temptation of doing so for many reasons. Inc. which allowed for monitoring of the float changes contemporaneously. 2008). ASBCA (1987) – Titan Pacific Construction Corp. under many forms of contracts. This view is accepted in the United States. 2003) and was supported by many court decisions. which in effect take risk allowance into consideration. PERT calculates the activities durations based on three possible durations: the minimum. Hurlbut.. since 1974. 2008). & Hillman. in practice. contracts. and DCCAB (1996) – MCI Construction. Proponents of the view that the contractor owns the float rely on that as a rationalization for their position. especially for large public projects. there are two layers of contingency in the schedule: the first is the contractor’s risk contingency embedded in the planned durations and the second is the float.

however. it follows that the float. non-critical) (Bunni.Implications to Revising the Schedule and/or Resequencing the Works Float is a crucial element in any CPM schedule. & Parvin. & Hillman. The Disputed Scenario Most forms of contracts seem to deal with the matter by regulating the usage of float as a shared resource by allowing its use in a way that will benefit the project (De La Garza. A free copy can be downloaded from www. On the other hand. methods. Driscoll. In this case.”. which allows the activities to be re-sequenced to mitigate delays.. For this very reason. which renders the NEC3 clause more theoretical than practical in the majority of cases. It is. unless stated otherwise in the contract. it follows from the view that float is for the party that needs it first. 2005). float is vital for risk management.. in itself. 2005. p. p.e. If the contract prevents the contractor from unilaterally revising the schedule without the engineer’s consent.eotprotocol. the engineer is not obliged to issue drawings in good time to enable the contractor to comply with the revised schedule (Knowles. some forms of contracts require the contractor to seek the engineer’s approval/acceptance of the revised and/or amended schedules.e. In terms of float utilizations. delaying the noncritical activities by the owner does not. give rise to extension of time. 2003). unnecessary for project managers who are working under such contracts to engage in a debate about who owns the float and ignore the contract’s view. however. therefore. however. thus granting benefit of the total float. in practice. 2006. under FIDIC forms of contract. Activities with float can be delayed without affecting the completion of the project. the project owns the float) (Wickwire. the NEC3 wording is specific for the terminal float. this serves to prevent the contractor from using the float to unilaterally change the timing of matters. in this case in particular. planned completion is later than planned completion shown on the accepted [schedule].. as stated in the Society of Construction Law (SCL) protocol for extension of time4.. Hurlbut.any delay to the completion date is assessed as the length of time that. that the contractor will be liable for any contractor’s delay that occurs after the float has been used to the extent that it affects the project completion (Knowles. 2008. The answer to the question above depends heavily on the float ownership debate as discussed earlier. some practitioners suggest that in this case. what happens if the contractor delayed this activity after it became critical? How to deal with the float in this instance is a subject of heated debate. due to the compensation event. pushing it to be critical.. it is highly unlikely for engineers and owners to accept a schedule with a planned completion earlier than the contractual completion. PMI Virtual Library | www. this implies that the float is owned by the contractor (Keane & Caletka. there are still some situations that contracts do not typically cover. Clause 63 of the Engineering and Construction Contracts (NEC3) provides that “. most forms of contracts provide that the extension of time is only due to the contractor when the relevant event (owner’s risk event) affects the project completion and/or the activities with zero float (i. is not always expressed in the contract and this creates many disputes. Nevertheless. this suggests that the contractor is not permitted to depart from the approved schedule without the project manager/engineer’s consent.e. critical activities). most construction contracts are written in a way that gives the contractor the ownership of the means. the majority of public projects include contract clauses that provide that the float is not for the exclusive use of any of the parties (i. is not for the exclusive use of the contractor. This | © 2010 Walied Ali Abdeldayem 4 . most modern forms of contracts allow both the contractor and the owner to influence the sequence of the works in one way or another. In the absence of such explicit requirements. that the contractor is entitled to modify his or her construction schedule. there can be no claim for extension of time for the time 4 of completion if the affected activities have positive float (i. For example. when the owner consumes the entire float for non-critical activity. Vorster. Practically speaking. and sequences of construction. it does not matter if the contract stipulates in explicit wording who owns the float—the inclusion of the “joint ownership of float” clause is enough. 2006). In the United States. Implications to Extension of Time (EoT) In relation to the EoT. and does not mean that float on an activity by activity basis is exclusively for the contractor’s use (Eggleston. 2005. the contractor can revise his or her schedule as he or she wishes. Also. 92). In addition. however. 158). It is widely accepted. 89). p. For example. p. 1991). For example. 200)...PMI.. At the risk of being repetitive. which are the owner’s responsibility (Eggleston. When the contract explicitly requires the contractor to seek approval and/or acceptance of his or her revised schedules.

This method allows quantification of the effects of “withinfloat” delays in noncritical activities and can predict the safe float consumption level for any activity (Sakka & ElSayegh. PA: Author. it has to be stipulated as such in the contract and agreed on between parties.PMI. and for this to work. for such a principle to work. Total float traded as a commodity.It is obvious from the aforementioned positions that there is no crystal-clear solution that will provide for an amicable settlement of such a conflict. N. Keane. (2008). M. Householder. (2006). C. Oxford. This concept is a well-established concept in the risk management literature and between practitioners. C. Journal of Construction Engineering and Management. PMI Virtual Library | www. If the principle is not initially stipulated in the contract. M. (although from the CPM perspective it will still have float) it will reduce the probability of the project being completed on time and therefore increases the risk of time overrun. The question should be: How do we determine liability under certain situations? The important point here is that project managers should not deal with the matter based on pre-assumptions and ignore what is in the contract.. Eggleston. Harris. References Bunni. there would be no liability on his or her part if the contractor delayed it further and caused delays to the project completion. Delay analysis in construction contracts. & Caletka. A. if the owner initially delayed the activity by more than its safe float range. the owner might partially be liable if further delay to this activity caused slippage to the project completion. Project Management Institute (PMI). UK: Blackwell Publishing Ltd. a separate agreement for the purpose of amicable settlement should suffice. UK: Blackwell Publishing Ltd. P. Z. in other words. (2001). R.e. Possible Solution A possible solution for the aforementioned situation is the adoption of the safe float range principle. Conclusion In my view. De La Garza. the debate in its generic form (i. and accepted by both parties. (1991). The common “joint ownership of float” and “non-sequestering of float” clauses are not wide enough to be indisputably applicable in this scenario. Needless to say. For the purpose of illustration.. Newtown Square. (2008). M.. & Parvin. (2005). 130–133. J. an activity with 10 days of float was found to have a range of safe float of 30%. R. (2007). Float consumption impact on cost and schedule in the construction industry. A. On the other hand. 2007). J. If the activity is delayed more than three days. The growing acceptance of the safe-float concept in the risk management literature and between practitioners of risk management suggests that there could be one possible “fair and reasonable” solution to the situations still under dispute. Sakka. it should be clearly stipulated in the contract. & Scott. who owns the float). it could be reasonable to say that if the owner delayed the activity by three days. is misleading and has proved to cause disputes more than provide | © 2010 Walied Ali Abdeldayem 5 . The fidic forms of contracts. Oxford. Who owns float? Journal of Construction Engineering and Management. Construction and Architectural Management. Oxford. assume that after performing the analysis to determine the safe float ranges. This situation needs a specific clause that provides a fair and reasonable solution for all parties.. Also. Engineering. 150 contractual problems and their solutions. B. The generic answer of the float being owned by one of the parties and not the other is unreasonable and cannot be applied in all cases. UK practice in dealing with claims for delay.. The same principle can be applied if it was the contractor who initially delayed the activity. & El-Sayegh. 116(1). S. UK: Blackwell Publishing Ltd.. does not increase the project risks. H. 317–324. (1990). By adopting this principle. (2005). & Rutland.. Knowles.” or similar clauses. parties engaged in an amicable settlement might want to take a similar endeavor to reach a fair and reasonable outcome. The NEC3 Engineering and Construction Contract—A commentary. S. UK: Blackwell Publishing Ltd. It presents a range in which the float deterioration is said to be “safe” or. Vorster. Oxford. Most forms of contracts regulate many aspects of the specific implications of float utilization. Project managers should be aware that most contracts regulate the float utilization between parties by the inclusion of “joint ownership of float” and/or “nonsequestering of float. this means that the probability of finishing the project on time “almost” remains the same if this activity is to be delayed by three days or less. 716–727. A guide to the project management body of knowledge (PMBOK® Guide)— Fourth edition.

ascertaining the facts of delay and demonstrating cause and effect in relation to the preparation and/or defense of extension of time claims. Walied has solid experience in providing productivity analysis.. Walied has been involved in large-scale arbitration proceedings for disputed amounts.Journal of Construction Engineering and Management. S. and in the preparation of acceleration claims. as well as delay analysis and forensic planning. residential buildings. New York. Walied is a civil engineer with broad experience in dayto-day planning and project control. Walied has over 11 years of worldwide experience in major projects. USA: Aspen Publishers. Inc. Driscoll. Hurlbut. Walied has provided specialist delay analysis services to contractors and employers on various complex construction projects. highways and interchanges. & | © 2010 Walied Ali Abdeldayem 6 . liability. (2003). and claims.. J. and resorts and hotels. Walied is currently working on his dissertation as part of obtaining his MBA degree from the University of Manchester.. In addition. S. which include mega commercial complexes and malls. Construction scheduling: Preparation. About the Author Walied Ali Abdeldayem is a senior consultant with a worldleading disputes resolution consultancy firm that operates in the construction arena. high-rise buildings. assessing delay damages due to lost productivity. using a variety of critical path methods of delay analysis. PMI Virtual Library | www. T.PMI. ranging from $300 million to in excess of $1 billion and has provided delay analysis and forensic planning services to lawyers. 124–130. Wickwire.