Entitlement to EOT with Contract Programmes

Puneet,



I tried to restist as this might start another huge debate, it seems a very hot topic in UK at the moment, but if you have good records then the method to use is Time Impact Analysis.

Hi all



You all seems to be very expert in all this. I desperately need your assesment on my ongoing project, which has the similar situation.



We have a Contactual Schedule, and because of various reasons the project got delayed by a good time though the project is still not completed but i want to see the EOT.



Various methods for delay analysis are available but which one is correct is still a question for me.



Let me start with As-Planned as Impacted & also as-built at same time.

I have the baseline schedule, Now my major delays are because of Law & Order and Variation of works.



First i incorporated my Law & Order delays in my base line schedule as per the actual dates they occured.

And then my activities got shifted to a new dates.

Now i incorpated the additional duration in this because of variation of work, simply by adding my additional duration in the planned duration. But what if i have executed this additional work before the start of my impacted. Can i claim this additional work? I hope i can?



Secondly As we all knows that we rarely execute as per the schedule sequence. so there are some activities which i started before there schedule start date without any instruction (acceleration)from the Owner. Also some of the schedule activities have monsoon calendar but in the rellity we executed them in monsoon. so being a reasonable Contractor my intentions are to finish the work on or before time. but while considering these things in my As-Built schedule i am loosing a good amount of EOT , which is more as per my As-Impacted schedule.



So which way I should go to ask for my EOT?

As-Planned-Impacted or As-Built.



Please reply at your earliest.

Thanks

David / Trevor



I agree strongly with Trevor’s point that planning should be done on the day. It would help both the Contractor and Employer hugely but I don’t want to get into a debate why it isn’t.



Programme a contract document - David is correct when he says varying from the activities exact start dates, finish dates and sequence without agreement of both parties would be a breach of contract. Sounds crazy, but it is true. Hence, programmes are normally not incorporated into the contract and are therefore not held to be contract documents. Normally they contain and or reflect contractual information, eg completion dates, working restrictions, etc but do not form any part of the contract. This leaves the Contractor free to manage the job as he chooses, etc, etc. If the programme is bound into the contract then both parties have agreed to carry out the obligations arising from that programme exactly as stated. The contract may (or should) contain provisions for varying the programme by mutual agreement as to allow unilateral changes would defeat the purpose of incorporating the programme in the first place. If the Employer really wishes to have that much control over the programme then there are better ways of doing it.



Who owns the float? I am with David on this one, ie whoever needs it. This doesn’t mean to say that the Employer using it does so without cost or consequence to himself. If the Employers use of the float at the time, or in the future, causes the Contractor additional cost then he would be entitled to claim that cost through dispuption, prolongation, or EoT if the Employers use of the float ultimately causes the completion date to slip.



The "at the time" effect is usually quite straight forward and as Trevor says, should be sorted out there and then on site. If it causes increased resources, supervision, out of sequence working, inefficient working, etc, etc then a disruption claim can be formulated. It doesn’t have to be critical delay before the Contractor can claim additional costs. He doesn’t just have to soak up the extra costs. If the Employers use of the float legitimately causes the Contractor additional cost then he can claim for it.



The "in the future" effects can only really be done with any certainty retrospectively after completion. You’re looking for the "but for" the Employers use of float at this point, eg late issue of information, this and that would have or did happen, etc.



Happy New Year.

Back to the original topic for a moment, before there can be discussion of EOT or entitlement there has to a definition of "contract programme". People throw away the term every day but it is hard to extract from them what that means exactly (to them). The innocent (yeah, right) contractor provides the original plan/schedule/programme on day 1 (yeah, right) for information and to demonstrate that he knows how to make one (yeah, right), but thereafter every difference (and there will be many) between reality (ie project execution) and the plan, which is quickly out of date and irrelevant, is used as an excuse to flog the contractor at the progress meeting. I have no particular sympathy for the contractor. I just find the flogging and the anxiety and attempts to avoid it entirely a counter-productive distraction caused by a mis-understanding.

I am not really saying that the use by the client of the float can be or should be withheld by the contractor. I just object to an interpretation which says that it is there for the free use of the client. The client should be aware that soaking it up increases the level of risk to the project. The contractor agrees originally to absorb most of the risk in the project but not to have more risk heaped upon him by a supposed ally who can pretend that what he does has no consequences. The way that the client can compensate the contractor for having his management capacity over-stretched is to ease up on the demand for completion by the contract finish date, even for extra scope which does not appear, at the time it is analysed, to be delaying the project finish. Those LDs are hanging over the contractor like the sword of Damocles.



I don’t know if I can agree that there is "accidental" float. It’s a plan overall so that’s planned float. The holes are as much a part of the sponge as the rubber is.

I don’t hold with the introduction of intentional dummy tasks called delay "contingency". It amounts to duration padding just as increasing the estimated duration of every Task to soak up its float would be. There is nothing that says the contractor has to show completion on the contract finish date and use a padded task to show it if necessary.



I don’t object to showing the project finish date after the contract finish date if that’s what the plan says. I realise that showing late finish is anathema to many and the client has to be hosed down if he sees it. Of course, the contractor still has a commitment to a promise to deliver by the date. It might just be that at some stage during the project things have blown out a bit and there is no feasible plan to meet contract finish date, but there might be by next week. I prefer to show late project finish than negative task float which is the same thing but more confusing.



I have a great dislike for retrospective analysis. It should be done on the day, agreed on the day and done with.

The trouble is, it never is. That’s why the claims process picks over the carcass of the project for a couple of years after it is finished. Once the horse has bolted you can’t get it back in the box. Contractors devote a lot of resources and cash to running claims but the dough would be better spent preventing them by immediate assessment and agreement when the circumstance arises.

I think there are two distinct discussions going on here; one is what does it mean if the programme is made a contract document and the second, the ownership of float.



I don’t think we can really reach any definitive conclusions on the first point unless we know more about the precise contractual mechanisms and what the provisions are in the case of default.



The second part about ownership of float also has at least two aspects; float that is generated by the duration, sequencing and logic (this I called ‘accidental’ float) and float that is created specifically by buffer tasks or planning to complete the project ahead of time (lets call it ‘intentional’ float).



In the first case, as Trevor suggests, accidental float ebbs and flows throughout the lifespan of the project. This is the float that current legal convention says should be available to who ever needs it first. I am generally with convention there as I can’t envisage a more equitable way to deal with it unless any extensions of time awarded through the currency of the project can be changed if another party subsequently causes delay. Maybe Trevor is suggesting that float is maintained if the default is by the employer – and that could result in extensions of time being granted far in excess of what the contractor requires to complete the project by the Contract date. Or that delays, and extensions of time, are only analysed at the end of the project when all the delaying events are known – I don’t think that would get many supporters, having no idea of liability until the completion of the project.



The instance of intentional float then that is a different storey and I am more towards the contractor having sole use of it. Of course there must be some rules about how it can be used and monitored and, for instance, if it is allowed to grow bigger than its original value following progress better than expected. I predicted previously (but it has not happened) that the ‘buffer task’ developed by Asta for PowerProject would become a much used activity on contractor’s programmes and be replicated by other software. Asta say “Buffer tasks are an explicit way of including and account for project contingency, supports the Critical Chain concept and dovetails with the Society of Construction Law’s Delay & Disruption Protocol.”



Referring to Trevor’s military analogy I see reserves in two ways also; ‘accidental’ ones that are there because of the size of the army and it’s movements around various theatres and maybe some unforseen reserve as a result of perceived threats diminishing or allies or enemies performing better or worse than expected. Whereas ‘intentional’ reserves are troops that are held back intentionally and assigned to a particular project (battle?) just in case tactics don’t go the way there were supposed to or that allies were weaker tan envisaged or enemies stronger than envisaged. Heavy engineering, shipbuilding and even construction ought to have some of both in their projects. And, like when a general should not get upset when one of his colleagues needs to use some of the ‘accidental’ reserves because his battle strategy is not going to plan, neither should a contractor get upset when the employer needs to use some float. After all, generals and contractors are all on the same side, with the success of their battle plans or completion of the project being the primary aim. However, when the intentional reserves of one general are commandeered by another without some counterbalancing forces, that general is right to feel peeved, similarly when the employer uses some of the contractors intentional float the contractor has the right to shout ‘foul’ if there is no recompense.



And, can’t you just se I’m not a military man!



Peace and Goodwill…



David



ps. I almost forgot… The use of ‘accidental’ float is not necessarily a free to the employer. The contractor does generally have the right to claim for the direct cost of disruption (the effects of events that do not delay the contract completion). Reduction of ‘accidental’ float often results in working less economically, more riskily and requiring more supervision and management input.



pps. And another thought… where is Charlie’s insight when we need it!

A delaying event by the client, say a variation/extra scope, may appear to be innocuous when it occurs. Perhaps, even, the event (eg "paint the bathroom again, a different colour") occurs and is analysed and planned for the future immediately on the day so the whole episode is dealt with immediately instead of being dragged out as normal. As far as the EOT goes there is a cut and dried criteria, does it appear, according to the current plan today, to extend the finish date? If not, then no EOT, or anything else except the price of the extra work. But this variation may not be benign just because it can pass this simple test. What if the project unfolds and it ends up on the CP later, which it would not have been able to do if it did not exist? Its insertion may have changed the whole relative criticality of the tasks. What was the critical path might not now be. And in the future, as the project actuality unfolds, this variation might be a time bomb which will cause the continuously changing CP to change other than it would have otherwise, and come back to extend the project finish beyond the contract finish date.

Similarly, an extra bit of scope which is agreed to be on the CP when it arises and gives rise to an EOT, might later, by expert management and good luck, be got off the CP, the same as any task might be got off the CP to be replaced by other tasks which were not critical but have become so.

Perhaps someone showed the lawyers a Gantt Chart but forgot to explain that the CPM is a method to plan and re-plan for change continuously from day to day. It is essentially for the management of a fluid situation rather than a frozen one. The former is project management and the latter is a legal construct to build the elusive but apparently necessary legal certainty into the contract. The contract drafters seek legal certainty but seem to not understand the CPM or else just ignore or contradict it.

I know that legal convention says that the client can erode the float till the cows come home as long as he doesn’t touch the critical path.

My examples were intended to show why this concept is, at best, deeply flawed, regardless of how universally it is the accepted wisdom.

The contractor/project manager is in no different position from the general with the army.

Sure the client can erode the float. Or, to put it another way, the contractor is obliged to accept variations and widening of the scope of the project, as long as it falls generally within the overall "spirit" of the contracted project. But that float should not be free.

Float can be created as well as eroded. Finishing Tasks before their Late Finish creates Float but only the contractor has control of this. The client only ever erodes the float, increases the scope and increases the project schedule risk, most of which is borne by the contractor.



A schedule, usually used as a Baseline schedule at the start of the project, is not in any way a promise to execute the work in detail as shown on the bars.

The start date of any task on the schedule is just the Early Start for scheduling forwards with the critical path method. Is there a promise to execute the particular Tasks between their respective ES and LF? I don’t think so. There is only a contract promise to deliver the entire project on or before the Contract Finish Date. Is there a promise to execute the Tasks in the sequence/order shown by the network predecessor relationships? If so, if any of the detail in a schedule/programme is a contract promise, then every contractor on every project will always be in breach. What about overall numbers such as the CPI, SPI or up-to-status-date numbers like BCWS, BCWP, ACWP or the baseline Costs and Hours S Curves? Again, there is no actual promise to perform against any of these, and even if there is, there is no remedy for a breach. Trying to prescribe how the project will be managed in such detail via the contract is a mis-understanding of the role of the contract, the Crital Path Method and EVA. The network diagram and the Gantt Chart do not say more than they say.

For any particular task the chart says only that "this task can start/finish as early as/as late as ES, LS, EF, LF provided that everything scheduled before it is executed exactly as shown in the schedule". The Schedule detail is an estimate. It never becomes a promise



If a contractor had a schedule which had float in it why would he ever reveal it, when it can be completely disguised by increasing the estimated duration of every Task until they no longer had any float to show?

An interesting analogy Trevor but I’m not sure if I agree with you!



Float could be a reserve against risk if it were purposely inserted into the programme and identified as such. In my experience, contractors tend not to do this other than have activities such as ‘snagging’ or ‘final clean and handover’ that do not have any real basis for the duration included in the programme (okay, a gross simplification but you know what I mean?).



Unless you are talking about the planned programme finishing before the contractual date most float in programmes is generated by the sequence, duration and logic of the programme.



I am still pretty much on the fence as to the ownership of ‘accidental’ intra-activity float. My view, I guess, is still that whoever needs it first can use it. Analogies can always be tailored to fit but it is a bit like we in the west having excess food but not sharing it with those in developing countries who need it, just in case we need it sometime in the future. For the good of the project, and for the good of mankind, we should allow our reserves to be used by those who need them most of all. Okay, maybe the Christmas spirit has gotten too much for me!



I thought the contractual position was relatively clear on this (with the proviso of the actual conditions of the particular contract). For there to be an extension of time there has to be a causative link between an event and a delay to project completion. If float is consumed because of the delaying event but the completion date is not compromised, then the event has not delayed completion and there can be no extension of time given. However, that does not stop a claim for disruption of the works it is then up to the parties to value that disruption and the diminution of float might come into that calculation.



On the general point of a programme being a ‘contract document’, I am still unclear how that happens (surely, drafters consider the outcomes of such amendments). I suppose it depends on the wording (again) but if a programme does become a contract document then I was under the impression that any deviations from it would be a breach; for instance an activity starting at any time other than shown on the programme (earlier or later) would be a breach. Can you imagine the turmoil this would cause and the counter mechanisms that would be required to ensure that such ‘minor’ breaches did not ultimately frustrate the contract.



Happy New Year to you all



David

"not needed and not used"



Float is a reserve against risk, ie insurance.

If you have an insurance policy anddon’t make a claim you cannot say it was not needed and not used.



If you are a general commanding an army in a battle and you have a reserve cavalry, the king cannot take the reserve away to be used elsewhere without imperilling your chances of winning the battle, even though he could say they weren’t needed and weren’t used.



The difference between the all up maximum design weight of an aircraft and its actual weight on take-off is a reserve against things which might happen but we don’t know what they are. If you load to max and you make it you cannot say that the flight was identically likely to have been successful with or without the reserve.

Lee,



The debate goes on, time to go and throw myself of a bridge I think!!!!!



The most appropriate method for analysing any delay / EoT depends on the information available and whether you’re doing it during the job or retrospectively.



As far as the programme being a contract document - who was the clever person that incorporated it into the contract? The reason programmes generally aren’t incorporated are exactly because of the problems you outline. The programme exactly as stated becomes part of the contract agreed.



To vary the programme, is therefore, to vary the contract - which if we’re talking most standard form of contract, can only be done through an instruction by the CA - which the contractor will no doubt try to seek some form of payment for. In other words, if you change the programme and reduce the contractors float, whether required or not, you may be liable to compensate him for his loss.



That said, if it’s not required then the contractor has suffered no loss to claim for, although I’m sure he won’t see it that way. It all gets abit messy.



First place to look is the contract and to ascertain what provisions there are for varying THE CONTRACT itself - not a variation of work under the terms of the contract. Once that is ascertained it might give you a better idea of what can or can’t be done, how it’s to be done, and who’s liable for what?



Then you might have a better idea of what you’re liable for if you reduce the contractors float etc and hence how to go about assessing delays, EoT’s, etc.

Wot?? Has exam time come around already?



Define "...most appropriate..." ;-)



Cheers,



Stuart



www.rosmartin.com