Construction and engineering practitioners often summarise the NEC3 Engineering and Construction Contract’s (ECC) position on float with the words, “the contractor owns the float”. This is a useful maxim, but conceals a hidden trap.
What is float?
The Society of Construction Law Delay and Disruption Protocol defines float as “the time available for an activity in addition to its planned duration.” However, the concept is best understood by considering what happens in real life: imagine a contractor preparing for a project. When the contractor plans work it estmates that amount of time it will take. The contractor often increases that estimate to give it a little leeway if there are any problems. That additional time is known as the float. For example, a contractor might estimate that fixing pipework on a small project will take 4.5 hours, but then round that up to 5 hours to allow for any mishaps. That extra 30 minutes is the float.
Types of float
In practice, a contractor often adds two types of float to a programme:
- Terminal float, which is the leeway the contractor adds to its estimate for completing the entire project.
- Activity float, which is the leeway the contractor adds to each activity it performs during the project.
Terminal float
The ECC assesses the impact of delay by reference to the contractor’s planned completion date, not the contractual completion date (clause 63.3). This means that the contractor’s terminal float remains untouched when assesing an extension of time; in other words, the contractor owns the terminal float.
Activity float and time risk allowances
The ECC makes no similar provision for activity float so, while there may be some room for argument, it seems likely that any assessment of delay will eat into the activity float remaining in a project. This means that the activity float is used up by delays as they arise, no matter who causes them; in other words, “the project owns the activity float”.
This is where the concept of “time risk allowances” becomes important. Time risk allowances are a required part of an ECC project programme (clause 31.2). If a contractor identifies an activity float in the programme as a “time risk allowance”, that is protected in the same way as the terminal float. In other words, “the contractor owns the time risk allowances”.
An important lesson
Once the ECC mechanism is understood, the danger for a contractor is blindlingly obvious: if it fails to identify each item of activity float as a time risk allowance, it risks its activity float being used up by events for which it is not responsible.
This underlines the importance of the programme in an NEC3 project. Producing it can be a time-consuming process, especially on a large project, but the importance of getting it right cannot be underestimated.
Hi
Please could you advise what happens to the TRA if the activity has been completed in the allocated time and doesn’t need the TRA, and the activity and TRA are on the critical path.
If the activity and the TRA period are progressed as complete at the planned completion date of planned activity, the target completion date will be brought forward to the benefit of the Client, yet the TRA belongs to the Contractor.
Please can you advise how the programme should be progressed
Many thanks
Mike
Mike
I am afraid that we cannot give advice or comment on individual cases. However, I wonder if the NEC’s official answer to a question about float provides some guidance, see NEC in Action: FAQs: Allowance for float: option A contract.
While that piece addresses a slightly different issue, the answer’s second paragraph may be instructive.
Hi Mike
Well, the TRA is ordinarily not accounted for in the form of a discrete activity but is rather accounted for in the activity durations. Effectively, the host of activity network paths which are constituted in your programme will determine the critical path (with TRA) and subsequently the completion date, often with some float between it and the contractual completion date.
Once float allowances and TRAs have been factored into the programme and the contract completion date is set, the contract completion date becomes binding on the parties and the entitlement to float utilization lies with whomever the ownership of float belongs. Whether that whom has right to the float uses the float or not is up to them. The contract completion date remains fixed and cannot be brought forward on the grounds of unutilized float.
Thanks.. It’s important to know who owns the float in construction schedule.
“For example, a contractor might estimate that fixing pipework on a small project will take 4.5 hours, but then round that up to 5 hours to allow for any mishaps. That extra 30 minutes is the float.”
That is contingency or reserve, or padding, not float. Float is the difference between the earliest start and the latest start in a properly constructed critical path network.