Article 005: Float: what is float, who owns the float, and how is float different to contingency?
What is float?
The Society of Construction Law Delay and Disruption Protocol second edition 2017, (“SCL Protocol”) defines float as the “time available for an activity in addition to its planned duration”.
Float can be negative as well as positive. Positive float is where an activity can be delayed without causing delay to the project completion date and negative float is how far behind program the activity currently stands. Float determines which activities are more critical than others and is monitored during the project to identify potential and actual delay to the project.
What is float used for?
Float is used to identify which activities are critical and which are not. If an activity has float and the contractor owns that float, the float may be used by the contractor to level and use resources more effectively if necessary. This may provide for more continuity of work by, for example, allowing non-critical work to be delayed up to the duration of the available float.
If a contractor owns the float, an excusable delay event (a delay which gives the contractor an entitlement to an extension of time) will not erode available float as an extension of time should be granted which will maintain the amount of contractor’s float that existed before the delay event.
However, a contractor may decide to build float into its program as a contingency. This can be done by adding additional time to the duration of an activity, that is, the program will show an extended duration. The contractor may also decide to add additional activities as a contingency.
Program constraints may be used to require an activity or group of activities to be carried out as late as possible, therefore showing no float. However, this could have the effect of making non-critical activities appear critical.
When non-critical activities become critical
When the float has been consumed in a non-critical activity, that activity will become critical. Even if the activity does not become critical, the fact that the activity itself has been delayed and float has been eroded, may result in financial loss because of the extended use of resources on the non-critical activities.
It is essential, therefore, for a contractor to monitor and track all activities and not to lose focus on delay, even to non-critical activities.
If the contract is silent on the ownership of float contained within a construction program, there are three general views on who owns the float:
The employer; or
The contractor could argue that it owns the float on the basis that it prepared the program to maximise the use of its resources to complete the works. A contractor could also argue that, if the employer uses the float for its own benefit, then there may be insufficient or no available float in relation to its own delays. Further, if the employer uses float, then the contractor would be less able, or even unable, to resequence its work to avoid and/or mitigate its own delay. An employer could argue that it owns the float on the basis that it has “bought” the project, that is, the employer is paying the contractor for the work.
There appears to be increasing support for the view that, if the contract is silent on who owns the float, the project owns the float and it is therefore shared between the employer and contractor on a first-come, first-served basis. This is the view held by the SCL Protocol on the basis that if one party uses the float first and the other party suffers financial loss, the other party is financially compensated.
Float versus contingency
There is a significant difference between float and the contractor’s contingency (the activity between the end of the program’s critical path and the contractual date for completion).
In the English case of Glenlion Construction v Guinness Trust (1987), the contract between the parties did not deal with a construction program where the planned completion date was earlier than the contract date for completion. The issues for the court concerned the contractor’s right to complete early. One of the issues before the court was whether Glenlion was entitled to execute the works in accordance with its program and hence complete by the early completion date. Another issue was whether there was an implied term in the contract that Guinness Trust should act to enable Glenlion to progress the works in accordance with the program and to complete by the program date for completion. The contract provided that Glenlion must complete “on or before the Date for Completion”. The court held that, if Glenlion was entitled to complete by the earlier program date, then it was also entitled to carry out the works so that the program date could be met. The next issue was whether the Trust had to “accelerate” its obligations under the contract to enable Glenlion to complete by the program date for completion.
Where the contract required the co-operation of the parties, as in a construction contract, the law will imply an obligation on the parties to do what is required so that the contract can be carried out. However, this implied term may only be enforced to the extent that it is necessary to make the contract workable and that the co-operation is for the benefit of the contract and not for just one party.
The court in Glenlion did not imply an obligation on the Trust to comply with the program date for completion because the program was not a contract obligation. The court considered that, whilst Glenlion was entitled to complete early, it was not obliged to do so. This was because the duty to co-operate did not extend to the early date for completion because there needed to be both an entitlement and obligation to complete early.
Glenlion was followed in JF Finnegan v Sheffield CC (1988) and the view of the English court in JF Finnegan was subsequently supported by the Australian Victorian court in Alucraft v Grocon (1994).
In Alucraft, the contract did not provide a start or finish date. Instead, the contract referred to the program and required Alucraft to comply with the approved program. There was no express term of the contract that required Grocon to give site access in accordance with the approved program. The court considered that Grocon should have provided Alucraft enough access to enable it to progress the works pursuant to the approved program. This means that, if a contractor has programmed to complete the work early and the program has contractual status, an employer will be obliged to act in accordance with the program.
However, the common law position can be modified by the express terms of the contract and that is often the case.
Summary: float, early completion and contingency
Float is the period that a non-critical activity may be delayed before there is delay to the planned date for completion. This is because the critical path ends at the date for planned completion. There may be a gap between the planned and contract date for completion which is often referred to as “float”, but this is not entirely correct, as it is not time available in a non-critical activity. The time-period between the planned completion date and the contract date for completion, to emphasise the distinction, is better referred to as “contingency”.
It is important to draw the distinction between float and contingency because under some standard form contracts the effect of the two periods is different. For example, in some standard form contracts, if the contractor is delayed in reaching practical completion, it will not be entitled to an extension of time due to delay to a non-critical activity. However, if the delay is critical and some, or all, of the contingency is used, the contractor will be entitled to an extension of time, notwithstanding the fact that without the extension the contractor would still have been able to complete the works by the contract date for completion. This has the effect of reinstating the contingency period.
My next article will cover the different types of delay, the contractor’s entitlement in relation to each type of delay, and the implications where there is concurrent delay; but what exactly is concurrent delay?
Delay and Disruption Protocol (2nd ed, Society of Construction Law, 2017). Glenlion Construction Ltd v Guiness Trust (1987) 39 BLR 94. JF Finnegan Ltd v Sheffield City Council (1988) 43 BLR 124. Alucraft Pty Ltd (in liq) v Grocon Ltd (Unreported, Vic Sup Ct, Smith J, 22 April 1994).