In construction contracts, the concept of ‘float’ refers to unallocated time within the project schedule under the contractor's construction program. Often overlooked, float plays a crucial role in managing delays and risks in construction projects. In essence, float is the buffer time that exists in a contractor’s program between planned activities, particularly between the completion of one activity and the start of the next, without causing a delay to the project's overall completion. This article explores the significance of float ownership, the legal ramifications of its allocation, and drafting strategies to ensure clarity in construction contracts regarding who controls the float.

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What Is Float?

The word ‘float’ is not expressly referred to in a construction contract. In technical terms, float represents the time that a particular task can be delayed without delaying subsequent tasks or the final project completion date. Float is most commonly associated with the ‘critical path method’ (CPM), a scheduling technique that identifies the sequence of essential tasks that directly affect the project's completion date. If the critical path is delayed, the entire project is delayed.

Understanding who owns the float can directly affect how delays are managed and whether the contractor is entitled to extensions of time (EOTs) or claims for additional costs.

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Contractor Ownership of Float

When the contractor owns the float, they gain control over how unallocated time within the schedule is used. This means the contractor can absorb delays—whether caused by their own activities or by uncontrollable factors such as adverse weather—without needing to request extensions of time immediately.

A contractor who owns the float essentially has the flexibility to use this unallocated time to manage delays on their own terms. This ownership is particularly beneficial for the contractor in situations involving minor delays. Instead of needing to seek formal EOTs for each instance of delay, the contractor can use the float to prevent delays from impacting the project’s critical path.

In practice, this also allows contractors to better manage their risks, especially in jurisdictions like Australia, where contractor ownership of the float is becoming more common, provided that any claims for delays relate to critical path activities. This middle-ground approach ensures that contractors can control risks without needing to involve the principal in every instance of delay.

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Principal Ownership of Float

Conversely, if the principal (the project owner) owns the float, any unallocated time within the schedule is used to absorb delays caused by the principal, rather than the contractor. Under this arrangement, the contractor is only entitled to claim time extensions or monetary compensation once the float has been fully utilised, even if the delay results from a breach of contract by the principal.

This scenario shifts the risk away from the principal and places it on the contractor, as any delay caused by the contractor or an uncontrollable factor must first use up the available float before any EOT or claim for compensation can be made. Principals favour owning the float because it allows them to absorb delays without necessarily granting extensions or incurring additional costs on the project, i.e., why should the principal grant an EOT or pay for a delay if that delay is not otherwise going to make the project late?

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Increasing Trend of Contractor Ownership of Float

In Australia, there is a growing trend towards the contractor owning the float, provided that any delay claims are related to critical path events. This approach strikes a balance between the interests of both the contractor and the principal. By allowing the contractor to own the float, the contractor gains greater control over the project schedule and is in a better position to manage and absorb delays.

This middle-ground approach provides the contractor with a mechanism to mitigate risks while still ensuring that the project schedule remains flexible. In this scenario, contractors have a vested interest in effectively managing the float to prevent delays from escalating and requiring formal extensions of time or additional costs.

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The Difficulty in Identifying Float Ownership

One of the key challenges in construction contracts is determining who owns the float. In many cases, contracts do not explicitly address float ownership, leaving it ambiguous whether the principal or contractor controls the unallocated time within the project schedule. This ambiguity can lead to disputes and differing interpretations of the contract, particularly in the event of delays.

Without clear language specifying float ownership, principals may assume control of the float by default, which can disadvantage the contractor. To avoid such disputes, contracts should include specific provisions regarding float ownership, ensuring that both parties are aware of their rights and obligations concerning delays and the use of unallocated time.

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Contract Drafting to Preserve Ownership of Float

To ensure that the contractor owns the float, the contract must clearly outline the circumstances under which the contractor is entitled to an extension of time. The following is an example of wording that can be used to preserve float for the contractor:

“The Contractor will be entitled to an extension of time to the extent the Contractor is delayed in achieving Completion."

To ensure that the principal owns the float, the contract must clearly outline the circumstances under which the contractor is entitled to an extension of time. The following is an example of wording that can be used to preserve float for the principal:

"The Contractor will be entitled to an extension of time to the extent the Contractor is delayed in achieving Completion by the Date for Completion."

This means that the delay cannot be otherwise absorbed within the program and that every day of delay caused by the principal, in fact, will not only delay completion but will also cause the contractor to miss the scheduled date for completion. In other words, the delay must be on the critical path of the program. The same result can be achieved by agreeing that the contractor owns the float but also ensuring that the contract includes a clause stating that any claim for delay by the contractor must relate to a critical path item or task as a condition precedent to the claim.

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Conclusion

Float ownership in construction contracts can significantly impact how delays are managed and which party bears the risk of delay. Whether the float is owned by the contractor or the principal can influence a contractor’s ability to claim extensions of time and additional costs. As the trend towards contractor ownership of the float grows in Australia, it is important for contracts to clearly define float ownership and ensure that both parties understand their rights and obligations. Well-drafted contract provisions can help avoid disputes and ensure that delays are managed effectively while protecting the interests of both the contractor and the principal.