EPC Contract and Risk Essentials

4.2.2 CRITICAL PATH and FLOAT

What Is Critical Path?

The critical path establishes the activities in sequences that are of fundamental importance
to the life of the duration of a project. Typically the critical path will be the minimum time
required to complete every single activity required from the project commencement to project
completion.

What Is Float?

Float is the amount of time that a task in a programme can be delayed by, without causing
delay to subsequent tasks or to the project completion date.

Float may be any of four types as shown in Figure 1:

•The amount of time • The difference

by which any between earliest
scheduled activity start / finish dates
can be delayed and latest start /
without delaying any finish dates for any
other scheduled activity
activity

Schedule
Free
Related

Resource
Project
Related

•The difference in •The difference

the period between between the
the first and last scheduled time
scheduled activities allowed for an
and prescribed activity and the time
contract period. it will take with
allocated resources

Figure 1:Definitions of Different Types of Float

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Who owns Float ?

We can identify four different schools of thought regarding float ownership which is
summarised in Figure 2.

Client
Clients tend to believe that they should
own float, because they have paid for it
in the contract price and need to retain
the right to make changes
Contractor
Contractors tend to believe that they
own float, because they are taking the
schedule risk and are exposed to delay
damages

Consider how this could affect both Consider how this could affect both
lump sum or reimbursable contracts lump sum or reimbursable contracts

Joint Ownership First Come First Served

Some industry practitioners believe that Float belongs to the first party to use it,
float should be jointly owned or by the on the basis that the party which extends
project, because both Client and the duration of an activity is liable for the
Contractor may need to use it consequences

Consider how float should best be What happens once all float is
managed and controlled consumed and further delay occurs?

Figure 2: Schools of Thought on Float Ownership

Since float is a risk allowance for time and efficient resource usage determined by the
Contractor, one must consider the risk exposure to the Contractor arising from the
consumption of float. That risk exposure is likely to vary considerably depending upon the
progress status of the project when float is consumed.

Given the lack of clear definition of what is described as float, the fertile grounds for disputing
the ownership of float, the ambivalence of the courts and the uncertainty caused by these
circumstances, it is strongly suggested that Contractors need to establish prior to contract
award how float is to be treated. Therefore it is strongly recommended that the contract is
reviewed to clarify the position on float.

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The Courts’ Views on Float Ownership

The following five examples illustrate different cases and their rulings by the courts in UK
and USA (i.e. based on anglo-american legal systems):

Glenlion Construction Ltd v The Guinness Trust (1986) – UK Case - Float must be
exhausted before delay accrues past the contractual date for completion and the Contractor
may claim entitlement to an extension of time.

John Driggs Company Inc. v The United States (1987) – USA Case - The court’s decision
appears to affirm the right of the Contractor to pace its work by the reallocation of resources
in observance of another more critical delay and the contractual right to use float made
available by another party’s Critical Path Delay.

Weaver-Bailey Contractors Inc. v The United States (1999) – USA Case - The scheduling
of early completion demonstrates that the Contractor intends to use the float. Many courts in
the USA have concluded that float is owned by the project and is available to the parties as
long as they act reasonably and can demonstrate early good faith use of the float.

The Royal Brompton Hospital NHS Trust v Frederick Alexander Hammond and Eleven
Others (2002) – UK Case - The judge confirmed that if at the time of a relevant event there
was unused float for the benefit of the Contractor, then the Architect was bound to take that
into account when determining the extent to which an event is likely to delay completion of
the works.

Construction Enterprises and Contractors Inc. (CEC) v Orting School District No.344
(2004) – USA Case - The appeals court decided that the “float time” clause was ambiguous
and the Contractor’s claims should not have been summarily dismissed. It found there were
material facts in dispute as to the meaning of “float time” and its decision was based in part
on the fact that “float time” was not a defined term in the contract, it is not a commonly
understood term and that the defendant had failed to offer evidence of what the parties
intended in the float provision.

Although case precedent may be relied upon, the courts do address each case on its merits
and thus it is important to carefully examine the facts of a particular case in order to obtain a
view as to its merits.

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