REUTERS | Aly Song
May 3, 2011
Construction and engineering practitioners often summarise the NEC3 Engineering and Construction Contract’s (ECC) position on floatwith the words, “the contractor owns the float”.This is a useful maxim, but conceals a hidden trap.
What isfloat?
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 contractorpreparing for a project.Whenthe 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 roundthat 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 importantlesson
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. Producingit can be a time-consuming process, especially on a large project, but the importance of getting it right cannot be underestimated.
