Float belong to the owner

The question is:

Should the employer be open to pay damages to the contractor at a later date for acting on and using what the contractor has told him?

In this case, using the float that the contractor has told the employer is available due to his chosen method/sequence of work.

Trevor,



The clients half baked ideas on what can be squeezed in is based entirely on what the contractor’s current programme is telling him can be squeezed in, that’s the main point of this discussion.



The programme shows in detail the time for the erection of the first 40 bays, allowing some further time for an individual bay to that shown the employer has fairly and reasonably estimated the time for this extra bay from the information in the contractor’s programme.

Trevor



I’m away for the rest of the week so won’t be able to reply but -



If you want to stick to the original contract, why agree to use a contract that allows extra work to be instructed?



For the sake of this discussion, lets say the employer wants an increase the size of a 40 bay steel framed single story building he’s having built by adding one more bay to the end of it. At this point, no M&E or finishes, just wants the extra bay erected and clad to possibly expand into at a later date because his business is now doing unexpectedly better than a year ago when he planned this new building.



It’s an increase in work content which can be accomodated by the float as indicated by the contractors programme when instructed, but certainly not outside the scope of the original contract variation clause.

OK, I’ll be in it. There are so many things wrong with this scenario that it is hard to know where to start.

Let’s call them the client (he’s not really an "employer") and the contractor.

First of all, these two deserve each other and any consequence that follows.

They should have made a contract which described what was being promised and committed to, and by whom, and then stuck to it. Otherwise, the whole concept of a contract is undermined.

The right (a tenuous one) to instruct extras is not there so that the client can just dream up stuff on a whim to add to the scope. If I go into a fruit shop and agree to buy an orange for $1, I can’t then just insist on a few grapes as well.

The client’s judgement or half-baked opinion about what can be squeezed in or not and whether that affects the contractor is irrelevant. If he wants to conduct the project planning and the construction management, he should have done so from the outset (like owner-builder) and not bothered to hire the contractor.

The contractor should have reminded the client to stick to what was agreed in the first place, and if pushed should have insisted on both money and time.

That’s enough provocation for now.

yup...i have been in this situation where the progress S curve rising like rocket but the critical activities have so many interfaces.

Think I’ll play devils advocate for a moment:



The contractor submits a programme, the CA approves it. The employers business is doing better than expected so he decides ha can afford a few additional things built. He looks at the contractor’s current programme update, (which is currently telling him the contractor will finish on time), and works out that he can instruct some extra work and the contractor can fit it in without it affecting the completion date due to the float available.



On this basis, (that completion is unaffected), and in complete reliance of what the contractor’s current programme is telling him, he instructs the additional work.



The contractor happily does the additional work and gets paid for it but later in the project, due his own fault, the contractor gets behind. The contractor now claims that if the employer hadn’t instructed the additional work he wouldn’t have fell behind because he would have had the float available.



Why should either the employer be penalised or the contractor benefit from this situation?

I believe that during the initial stage of the project float(s) doesn’t exist. How can you own something that does not exist?! or how can you own something that is not even calculated yet? And even after the calculation of float(s), it’s not certain if it would be acceptable! ...by the way, who made the calculations?!!!

You people out there



are lost soul in project management



the simplistic way to finish this discussion is to place in the contract



"THE OWNER OWN THE FLOAT"



Plains and simple



And you will get a very reasonable CPM grom client\s contractor.



no more bulldhitting around, no more zero total float

Guys

As one of the folks who was there when CPM was invented and then PERT I cannot agree that float belongs to the client.

Going back to when we wrote the original Arrow Diagram software we already were considering the scheduling of resources using float. Total Float is the result of the maths within the various paths in the Arrow (now Precedence) Critical Path Networks.

PERT was created in conjunction with Booz Allen and Hamilton back in 1957 for the Polaris Missile project and was specifically created to handle estimating doubt (risk ! )The Total Float and the Free Floats (both Early and Late) and Independent are the resul of the maths.

I was both in the US and UK where in the UK International Computers and Tabulators (who are known as Fujitsu) developed 1202 Pert in 1959, 1300 Series Pert 1961, OPUS, APPRAISE, 1500 Series PERT, 1900 Series PERT, etc etc

All produced Resource Schedules which analysed the resource limitations defined. Critical Activites are scheduled immediately and may or may not overload the resource. Activities with float would be delayed if by assigning the resource, it would go into overload.



Many learned discussions in the Operational Research Society - where as a knowledge area we used to be included with, defintely came out in support of the fact that the Client can’t possibly own the Total Float, because the resource scheduling algorithm would utilse it and besides the value of the Total Float was and still is TOTALLY dependent on the forward and backward pass - I hope to God I do not have to explain Forward and Backward passes.



Most PC based software does not provide the user with late frre float and independent float values, or do not make it obviously for the more learned and skilled of our P & S folk.



So the Total Float belongs to the Network. NOw ! who owns the data and results from the network is another ball game



Raf

Hi Armando



Thanks for bringing this debate back to basics.



I remember doing those CPM networks using pencil and graph paper - not even calculators in those days. A forward and backward pass would take an hour or two.



Primavera was - I beleive - the first computer programme to take over the calculation process but plugging in the data was still a tedious process.



P3 has not moved on much since then.



Best regards



Mike Testro

Hi Guys,



While looking for something else entirely, I mis-typed a search term and got this article.



I found it quite interesting, although it may pose more questions than it answers.



Chris Oggham

Anoon,



I agree with you. As for me it is also better if we take a look back a little of history why PERT & CPM were developed.



I reviewed few of my notes...It was in the later part of the 1950’s that the U.S. Navy Special Project Office & the consulting firm of Booz, Allen & Hamilton conceptualized PERT in the efforts of the US Government to speed up the Polaris Missile Project. PERT concept stressed probabilistic activity time estimate because the field in which it was developed was typified by high uncertainty. In 1956, prior to the development of PERT, the Critical Path Method was developed by J.E. Kelly of the Remington Rand Corp. & M.R. Walker in an efforts by commercial industry to make an advanced scheduling & cost control methods. CPM originally made no provisions for variable time estimates which is in contrast with PERT but in the conceptual analysis, most of these differences were relatively minor.



Therefore, for me, both conepts PERT & CPM were developed for the benefit of the client / owner.



In my opinion, based on the above, the durations of the activities in the critical path is not a fact. Or, it is not beyond reasonable doubt being based either on a certain level of uncertainty & variable time estimates.



For me, both the contractor & the owner shares ownership & responsibilities of the floats both in the original path & the floats that are generated during project implementation either positive or negative floats.



Thus, should the contractor fails to manage his part of the path, LD will be charged against him. On the other hand, if it is the client who fails, the contractor may claim for EOT & among other applicable claims in accordance with the provisions of the contract.



I have a question guys, I know this is out of this thread but sorry for this...If PERT & CPM were developed by the US during the cold war, what method did the Russians used?







Regards,



Arman

I think it’s better to discuss about the practical determination of float(s) and not the ownership of it, as float is subjective so as the project.



If the project belongs to the client, and float(s) belong to the project, who has the responsibility to determine float(s)?!!! The Client or the Contractor?



I believe that it is always the contractor who’s responsible for preparing the detailed program/schedule based on his methodologies, and therefore plays with the float(s). But! the program always needs approval of the Client! so as the float(s)!

First and foremost thing,



It is not necessary tat all activities with zero float will be on critical path. At least CHARLIE shud know tat or is he like a consultant who tells u time by looking into ur own watch. Just refer to Ronald Winter’s paper on Longest path. Its explained beautifully.



Neway, Instead of putting this funky statement into the contract, y there is a need to approve a program with float then. Can’t client / consultant will make changes in the program and will bring the program with almost zero float before approval. I dont need to tell here to make a program with zero float. Its all possible.



Has somebody locked someone’s brain as these foolish ideas are poping out.



With such a booming market and with so many jobs flowing around, which contractor would like to work with a client / consultant who will force u to make a program with zero float or yelling OWNER BELONGS TO FLOAT.



Cheers,



Ravi

Guys,



It is very educational to read all your comments. Be rest assured that I or probably other PP members have valued your comments. Thanks guys.









Regards,



Arman

We do.

Unless stipulated otherwise in the contract, the float belongs to the project.

Whether the Owner, Client, Contractor or Sub contractor want to claim it, at the end of the day all considerations will be given for the benefit of the project objectives.

Chris is right. If it was just that simple, we should not be having this discussion for several years now I believe, in planningplanet.

Charlie,



Who invited you anyway? It was just an information for those attending. Simple. Trying to be smart again?



cheers,

Anoon



Take note that if contractor will prepare cpm without float then all activities are critical.



if one activity is delayed than the project delay



and if delay by contractor is concurrent with owner delay, then, there is no eot entitlement.



Contractor will lost everything



what im trying to say is for the contractor to be reasonable in preparing cpm to minimize not eliminate the use of float.

"everything is negotiable" contracts are negotiable, but I believe (always)that during the drafting of the contract there is no detailed program/schedule that determine(s) the float, so nobody ever notice or give importance to floats (who cares!)how can you practically determine float(s) on EPC projects?!!!



if you include in the contract, that the "Owner owns the float", then it is supposed to be considered that the owner had prepared the detailed program/schedule and is confident that such is feasible in order to negotiate with probable contractors. If that is the case (if i’m on the contractor’s side) i’ll see to it that i’m going to prepare a program/schedule without any float!

BUT BUT BUT



WHY CAN’T WE JUST INCLDUE IN THE CONTRACT



"THE OWNER OWNS THE FLOAT"



WHY????, WHY???



I worked in the project management consultant. What professional bias will I be charged if I will advised the owner to include "THE OWNER OWNS THE FLOAT"



Am I doing a desrvice to the project management practice.



Or it will take a lot of tiime for any project mnagement institute to revise there books or idea by simply stating "THE OWNER OWNS THE FLOAT".

The contractor can say no to any of the owner’s terms and conditions. Everything is negotiable.

The contractor should especially reject, if necessary, the owner’s arbitrary contract finish date in favour of a feasible finish date based on what it will take to do the job.

Trouble is, most contractors will sign up to a contract finish date without having done sufficient planning prior to signing the contract to know if the contract finish date is even feasible, possible or achievable, and usually discovers too late that it is not. There was never enough time to do the job, never any float in it, in the first place.

There may be float in the non-critical paths (where else could it be?) and the owner may think he can add in variations (change his mind etc)into the non-critical paths withou this having any impact on the contractor or his ability to meet some target date (ie the contractor justr has to cop it). However, any float that is there is part of the contractor’s general reserve against various risks, known and unknown. Using it up has predictable consequences.



CJ-O says something profound:

"indulging into stupid debate as to who really own the float"

Yes, it is. Regardless of what legalistic nonsense either party can jam into the words of the contract and force feed to the other (slightly more gullible) party.

Hi Guys,



Charlie has made the point clear and simple that - All the owner has to do is to place in his contract with the contractor that "THE OWNER WILL OWN THE FLOAT".



But then again if it was really just that simple, "Who owns the float", would not be one of the topics under discussion at 52nd Annual Meeting of AACE International & 6th World Congress of ICEC in Toronto.



While Charlie has suggested an approach to the difficulty, what happens if the contractor says "No" to a contract with such a condition specified?



Chris Oggham

See



no need to attend.



All the owner has to do is to place in his contract with the contractor that "THE OWNER WILL OWN THE FLOAT".



Plain and simple, no complication.



Whatever this means to the contractor who generally preparet the project cpm schedule, let the contractor elaborate.



It is the owner prerogative to protect his interest and to stop any discord within the project team by indulging into stupid debate as to who really own the float.



The other advantage to this approach is for the contractor to seriously evaluate his cpm and to minimize exessive and unreasonable float, knowing that he can not manipulate the client regarding the issue of float.

This is for all those planning to attend the 52nd Annual Meeting of AACE International & 6th World Congress of ICEC in Toronto. There will be a technical topic which will discuss/debate the subject of "Who owns the float".

Precisely because no two contracts are exactly the same, (even apparently standard forms are usually customised versions), that there will never be a single right answer. The best we can do on here is talk generally about the topics, the right answer for a given contract will depend on the contract itself.



Time is universal to all of us, there’s no reason why there can’t be a universal extension of time clause, at least in its general principles but with customisable risk allocation to suit each project. Then we would all know where we stood on every project - but this is dreaming as it will never happen.

It’s seldom you encounter a programme’s critical path at the onset of the project will be the acceptable critical path for some of the reasons below:



1. The planner plugged-in buffers. Long durations.

2. Constraints were unnecessarily assigned.

3. Crewing is not clear. e.g. 4 people in one crew, 6 people in 1 crew.

4. Terminal float.

5. Inadequate details in schedule.

6. Is the acceptance of the programme by the client’s CA bound him contractually?



The above and maybe more combined with contract stipulations or absence of stipulations(Contractor has the obligation to mitigate project delay, Best endeavours)adds up to the confusion on how eot, mitigation, acceleration, ownership of float should be resolved.



If there’s one contract that connect all these dots, it would certainly much easier to come to an agreement. But unfortunately, for whatever reason, contracts I have encountered lacks one or more of the above.



No wonder, even in this thread, we don’t have an agreement yet.

Raviraj,



Sorry I don’t have a copy but Ronald posts on this site and so you could contact him directly through the site.



Andy

Andy,



BTW do u hav ronald’s paper on Longest Path now. I lost somewhere. If u hav, wil u plz paste the link here.



Cheers,



Rav