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

F
loat ownership has been the subject of hot debate for regulated in the contract in some way, shouldn’t the focus be
a long time. Whether float is owned by the contractor, on the specific situations that may give rise to such disputes?
the owner, or the project, is still an ongoing argument
in many countries around the world. In this article, the focus What is Float?
is not about which party is correct; rather, the focus is more Generally speaking, float is the period during which a non-
about the practical implications of float ownership. In my critical activity can be delayed. There are a few types of float;
view, the debate has become more of a hypothetical debate, the most important types are the free float and the total float.
with little association with reality. The free float is “the amount of time that a schedule activity
Should the question be who owns the float or, what can be delayed without delaying the early start date of any
does float ownership mean, and what are the implications of immediately following schedule activities” (PMI, 2008, p. 435).
such ownership? Also, many project managers overlook the Free float is used mainly for resource leveling (smoothing);
contract clauses that regulate the utilization of the float and in other words, easing the high peaks by rescheduling the
engage in unnecessary debate based on irrelevant assumptions activities so the resources become more uniformly disrupted.
or past experiences, which do not apply to the project at The most important type of float is the total float, which is
hand. If many of the implications of such a debate are already “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.
Should the Aspects of the Arguments
The debate is fierce, because each party (i.e., the contractor
question be who owns
and the owner) understands the vital role of float to the
the float or, what does float project. Generally speaking, each party believes that the
exclusive ownership of float is in the party’s best interest. This
ownership mean, and what are lays the foundation for an adversarial relationship between
parties, especially if the contract does not regulate the float
the implications of such utilization between parties. The float ownership has two
major aspects: the first is the ability to directly or indirectly
ownership?
influence the construction methodology and/or sequence The View that Float is Owned by the Contractor
once the project execution has started, and the second aspect The view that float is owned by the contractor implies that the
is probably more interesting and relates to the entitlement contractor is entitled to utilize such float for his or her own
of extension of time (EoT) and the application of liquidated risk events and recovery rescheduling. This traditional view
damages (LDs). once had wide acceptance among practitioners, especially in
There are three main views on the matter: some argue the early days of delay claims and before the widespread use of
that the entitlement to utilize float is for the contractor, some sophisticated critical path method (CPM) software packages.
believe it is only for the owner, and others feel that it is owned At that time, most of the contractors’ schedules were prepared
by the project.1 These views are discussed in more detail in a simple bar chart format (Wickwire, Driscoll, Hurlbut, &
hereinafter. Hillman, 2003), which did not allow for easy and practical
monitoring of the float and tracking its consumption
A Contract Perspective throughout the project.
Many practitioners expect to find a clause in the contract The proponents of this view argue that the contractor
that says, in explicit wording, that float is owned by one of was the party who developed the schedule and the float is an
the parties; for example, “Float is owned by the contractor attribute to this schedule. Float allows the contractors the
(or the owner).” If such a clause with that explicit wording flexibility to perform their duties properly and effectively
is not stated in the contract, each party asserts (or claims) meet the completion date; it also helps the contractor plan the
the float ownership rights to be his own, based on either work, and therefore it is the contractor’s own contingency for
past experience in other projects; previous court cases, which any unforeseeable events. In extreme cases, they go further to
might not apply to the project at hand; or just according suggest that if an owner risk event occurred in a non-critical
to their own personal preference and view of the debate. activity, the contractor should be given an extension of time
This inaccurate perception gives rise to unnecessary disputes to maintain the same level of contingency before the event
between parties. occurred. Moreover, about 20 years ago, some commentators
Although such an explicit clause can be found in some suggested that the contractor should be able to sell the float to
contracts, it is not the only way to regulate the float usage the owner (De La Garza, Vorster, & Parvin, 1991).
between parties. Most contracts deal with the matter through This view still has its appeal in some parts of the world.
the inclusion of what is referred to as “joint ownership of A recent survey in the United Kingdom revealed that 80%
float” and/or “non-sequestering of float” clauses. of the respondents assumed that the contractor owns the
The “joint ownership of float” clause indirectly float; not surprisingly, the majority of those surveyed were
indicates ownership by stating that no time extension or contractors (Harris & Scott, 2001). Given that most forms of
other compensation will be granted for delays to non- contracts include “joint ownership of float” clauses, the survey
critical activities until the delay exceeds the available float results should have been different (i.e., should have been
(Householder & Rutland, 1990). On the other hand, the similar to the contract view). This inconsistency highlights
“non-sequestering of float” clause prevents the contractor the fact that many practitioners fall into the traps of their
from preparing a baseline schedule with overstated duration own assumptions and ignore what the contract says about
to reduce float, for example, by stating that only 30% of the the matter.
activities can be critical (Wickwire, Driscoll, Hurlbut, &
Hillman, 2003). The View that Float is Owned by the Owner
It might be surprising to learn that there are numerous Another side of the argument is that the float is owned
disputes about this, because some project managers presume by the project owner. The proponents of this view argue
that the float is owned by the contractor (or the owner) and that float is contingency time for the project; hence, it is a
manage the project based on that inference, despite having risk management tool against delays caused by an owner
“joint ownership of float” and/or “non-sequestering of float” risk event. From this point of view, if delay events affected
clauses in the contract that suggest otherwise. non-critical activities, their only effect is reduction of float,

1
A fourth view is that the float is a shared resource that is not owned by any party. This view is very similar to the view that
the project owns the float, and the differences don’t have noticeable implications for the purpose of this paper; therefore, this
view is not included in the discussion.

PMI Virtual Library | www.PMI.org | © 2010 Walied Ali Abdeldayem


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

2
See, for example, GSBCA (1975) – Dawson Construction Co.; ASBCA (1987) – Titan Pacific Construction Corp.; DDC
(1990) – Williams Enterprises, Inc. v. Strait Manufacturing & Welding Inc.; DOTCAB (1990) – Ealahan Electric Co.; Cl.
Ct. (1990) – Weaver-Bailey Contractors, Inc. v. United States; and DCCAB (1996) – MCI Construction, Inc.; all are cited in
(Wickwire, Driscoll, Hurlbut, & Hillman, 2003).
3
See Ascon Contracting Ltd v. Alfred McAlpine Construction (1999).

PMI Virtual Library | www.PMI.org | © 2010 Walied Ali Abdeldayem


3
Implications to Revising the Schedule and/or Re- of completion if the affected activities have positive float
sequencing the Works (i.e., non-critical) (Bunni, 2005). In the United States, the
Float is a crucial element in any CPM schedule. Activities majority of public projects include contract clauses that
with float can be delayed without affecting the completion provide that the float is not for the exclusive use of any of the
of the project, which allows the activities to be re-sequenced parties (i.e., the project owns the float) (Wickwire, Driscoll,
to mitigate delays. For this very reason, float is vital for risk Hurlbut, & Hillman, 2003). In this case, delaying the non-
management. critical activities by the owner does not, in itself, give rise to
It is widely accepted, unless stated otherwise in the extension of time. At the risk of being repetitive, it does not
contract, that the contractor is entitled to modify his or her matter if the contract stipulates in explicit wording who owns
construction schedule, thus granting benefit of the total float. the float—the inclusion of the “joint ownership of float”
Also, most construction contracts are written in a way that clause is enough.
gives the contractor the ownership of the means, methods,
techniques, and sequences of construction. The Disputed Scenario
Nevertheless, some forms of contracts require the Most forms of contracts seem to deal with the matter by
contractor to seek the engineer’s approval/acceptance of the regulating the usage of float as a shared resource by allowing
revised and/or amended schedules. In the absence of such its use in a way that will benefit the project (De La Garza,
explicit requirements, the contractor can revise his or her Vorster, & Parvin, 1991); however, there are still some
schedule as he or she wishes; however, some practitioners situations that contracts do not typically cover. For example,
suggest that in this case, the engineer is not obliged to issue when the owner consumes the entire float for non-critical
drawings in good time to enable the contractor to comply activity, pushing it to be critical, what happens if the
with the revised schedule (Knowles, 2005, p. 89). contractor delayed this activity after it became critical?
When the contract explicitly requires the contractor How to deal with the float in this instance is a subject of
to seek approval and/or acceptance of his or her revised heated debate.
schedules, this suggests that the contractor is not permitted The answer to the question above depends heavily on
to depart from the approved schedule without the project the float ownership debate as discussed earlier. For example,
manager/engineer’s consent. In terms of float utilizations, it follows from the view that float is for the party that needs
this serves to prevent the contractor from using the float it first, as stated in the Society of Construction Law (SCL)
to unilaterally change the timing of matters, which are the protocol for extension of time4, that the contractor will be
owner’s responsibility (Eggleston, 2006). liable for any contractor’s delay that occurs after the float has
Practically speaking, most modern forms of contracts been used to the extent that it affects the project completion
allow both the contractor and the owner to influence the (Knowles, 2005, p. 92). This view, however, is not always
sequence of the works in one way or another. It is, therefore, expressed in the contract and this creates many disputes.
unnecessary for project managers who are working under On the other hand, Clause 63 of the Engineering and
such contracts to engage in a debate about who owns the Construction Contracts (NEC3) provides that “...any delay to
float and ignore the contract’s view. If the contract prevents the completion date is assessed as the length of time that, due
the contractor from unilaterally revising the schedule without to the compensation event, planned completion is later than
the engineer’s consent, it follows that the float, in this case in planned completion shown on the accepted [schedule]....”,
particular, is not for the exclusive use of the contractor. this implies that the float is owned by the contractor (Keane
& Caletka, 2008, p. 200); however, the NEC3 wording is
Implications to Extension of Time (EoT) specific for the terminal float, and does not mean that float on
In relation to the EoT, most forms of contracts provide that an activity by activity basis is exclusively for the contractor’s
the extension of time is only due to the contractor when use (Eggleston, 2006, p. 158). In addition, in practice, it is
the relevant event (owner’s risk event) affects the project highly unlikely for engineers and owners to accept a schedule
completion and/or the activities with zero float (i.e., critical with a planned completion earlier than the contractual
activities). For example, under FIDIC forms of contract, completion, which renders the NEC3 clause more theoretical
there can be no claim for extension of time for the time than practical in the majority of cases.

4
A free copy can be downloaded from www.eotprotocol.com.

PMI Virtual Library | www.PMI.org | © 2010 Walied Ali Abdeldayem


4
It is obvious from the aforementioned positions that there Conclusion
is no crystal-clear solution that will provide for an amicable In my view, the debate in its generic form (i.e., who owns the
settlement of such a conflict. The common “joint ownership float), is misleading and has proved to cause disputes more
of float” and “non-sequestering of float” clauses are not than provide solutions. Most forms of contracts regulate many
wide enough to be indisputably applicable in this scenario. aspects of the specific implications of float utilization. The
This situation needs a specific clause that provides a fair and generic answer of the float being owned by one of the parties
reasonable solution for all parties. and not the other is unreasonable and cannot be applied in all
cases. The question should be: How do we determine liability
Possible Solution under certain situations?
A possible solution for the aforementioned situation is The important point here is that project managers should
the adoption of the safe float range principle. This concept not deal with the matter based on pre-assumptions and ignore
is a well-established concept in the risk management what is in the contract. Project managers should be aware that
literature and between practitioners. It presents a range in most contracts regulate the float utilization between parties
which the float deterioration is said to be “safe” or, in by the inclusion of “joint ownership of float” and/or “non-
other words, does not increase the project risks. This sequestering of float,” or similar clauses.
method allows quantification of the effects of “within- The growing acceptance of the safe-float concept in the
float” delays in noncritical activities and can predict the risk management literature and between practitioners of risk
safe float consumption level for any activity (Sakka & El- management suggests that there could be one possible “fair
Sayegh, 2007). and reasonable” solution to the situations still under dispute,
For the purpose of illustration, assume that after and for this to work, it should be clearly stipulated in the
performing the analysis to determine the safe float ranges, contract.
an activity with 10 days of float was found to have a range
of safe float of 30%; this means that the probability of References
finishing the project on time “almost” remains the same Bunni, N. (2005). The fidic forms of contracts. Oxford,
if this activity is to be delayed by three days or less. If the UK: Blackwell Publishing Ltd.
activity is delayed more than three days, (although from De La Garza, J. M., Vorster, M. C., & Parvin, C.
the CPM perspective it will still have float) it will reduce M. (1991). Total float traded as a commodity. Journal of
the probability of the project being completed on time and Construction Engineering and Management, 716–727.
therefore increases the risk of time overrun. By adopting Eggleston, B. (2006). The NEC3 Engineering and
this principle, it could be reasonable to say that if the owner Construction Contract—A commentary. Oxford, UK: Blackwell
delayed the activity by three days, there would be no liability Publishing Ltd.
on his or her part if the contractor delayed it further and Harris, R. A., & Scott, S. (2001). UK practice in
caused delays to the project completion. On the other hand, dealing with claims for delay. Engineering, Construction and
if the owner initially delayed the activity by more than Architectural Management, 317–324.
its safe float range, the owner might partially be liable if Householder, J., & Rutland, H. (1990). Who owns float?
further delay to this activity caused slippage to the project Journal of Construction Engineering and Management, 116(1),
completion. The same principle can be applied if it was the 130–133.
contractor who initially delayed the activity. Keane, P., & Caletka, A. (2008). Delay analysis in
Needless to say, for such a principle to work, it has to construction contracts. Oxford, UK: Blackwell Publishing Ltd.
be stipulated as such in the contract and agreed on between Knowles, R. (2005). 150 contractual problems and their
parties. Also, parties engaged in an amicable settlement solutions. Oxford, UK: Blackwell Publishing Ltd.
might want to take a similar endeavor to reach a fair Project Management Institute (PMI). (2008). A guide to
and reasonable outcome. If the principle is not initially the project management body of knowledge (PMBOK® Guide)—
stipulated in the contract, and accepted by both parties, a Fourth edition. Newtown Square, PA: Author.
separate agreement for the purpose of amicable settlement Sakka, Z., & El-Sayegh, S. (2007). Float consumption
should suffice. impact on cost and schedule in the construction industry.

PMI Virtual Library | www.PMI.org | © 2010 Walied Ali Abdeldayem


5
Journal of Construction Engineering and Management, and forensic planning. Walied has provided specialist delay
124–130. analysis services to contractors and employers on various
Wickwire, J., Driscoll, T., Hurlbut, S., & Hillman, S. complex construction projects, ascertaining the facts of
(2003). Construction scheduling: Preparation, liability, and delay and demonstrating cause and effect in relation to the
claims. New York, USA: Aspen Publishers, Inc. preparation and/or defense of extension of time claims,
using a variety of critical path methods of delay analysis.
About the Author In addition, Walied has solid experience in providing
Walied Ali Abdeldayem is a senior consultant with a world- productivity analysis, assessing delay damages due to lost
leading disputes resolution consultancy firm that operates in productivity, and in the preparation of acceleration claims.
the construction arena. Walied has over 11 years of worldwide Walied has been involved in large-scale arbitration
experience in major projects, which include mega commercial proceedings for disputed amounts, ranging from $300 million
complexes and malls, high-rise buildings, residential to in excess of $1 billion and has provided delay analysis and
buildings, highways and interchanges, and resorts and hotels. forensic planning services to lawyers.
Walied is a civil engineer with broad experience in day- Walied is currently working on his dissertation as part of
to-day planning and project control, as well as delay analysis obtaining his MBA degree from the University of Manchester.

PMI Virtual Library | www.PMI.org | © 2010 Walied Ali Abdeldayem


6

You might also like