KNOWLEDGE

Who owns float?

Morton Fraser_Hayley Swanson
Author
Hayley Swanson
Senior Solicitor
PUBLISHED:
07 December 2021
Audience:
Business
category:
Article

Float is the additional time provided for in a contract programme over and above what the contractor actually needs to complete construction. It is the difference between how long the contractor thinks they will need to complete, and how long they actually have to complete. In short, float is the amount of time that certain works can be delayed or shifted in time without causing a delay to completion. If the contractor exhausts the float, this will affect the completion date.

In order to identify float, it is essential that the contractor properly prepares and regularly updates its programme.

Under the NEC suite of contracts, there are detailed programming requirements and programmes must be submitted for approval by the project manager, whose approval or rejection must be given within two weeks.  Float is particularly important in the NEC contracts as the Employer can obtain the benefit of the float where there has been a compensation event which does not require a change to the completion date (because the delay is not to a critical activity).

There is often a "first come first served" approach to obtaining the benefit of float under the NEC, particularly where delays are caused by both parties, as opposed to a single particular act of one party.  For example, if the Employer instructs a variation which exhausts the float, the Contractor cannot then obtain the benefit of the float if they cause a critical delay. The difficulty lies in establishing the sequence of events, which is why it is essential that proper records and programmes are maintained and updated throughout the project.

In 2017 the Society of Construction Law ("SCL") produced the second edition of their Delay and Disruption Protocol, which is based on 22 Core Principles. The SCL also produced accompanying guidance. The guidance says that where the parties in their contract have not made clear provision for how float should be dealt with, it will not be deemed to be exclusively for the use or benefit of either party. 

You should therefore ensure that your contract addresses who owns the float and in particular whether float requires to be exhausted before an extension of time can be granted to the Contractor, and whether both Employer and Contractor delays can exhaust float.

Next week we will consider early warning notices under the NEC form of contract.  If you haven’t read our previous delay blogs, they can be found here.

Should you require assistance with any aspect of a construction contract, we have a large and experienced construction team who would be happy to discuss this with you.

 

Disclaimer

The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Morton Fraser LLP accepts no responsibility for the content of any third party website to which this webpage refers.  Morton Fraser LLP is authorised and regulated by the Financial Conduct Authority.