In issue 20 of the Trett Digest Tony Farrow invited readers to offer their own views on the ‘thorny the issue of programme float’ when project delays occur and extensions of time have to be addressed. He implied that programme float belongs to the ‘project’ and whoever got to the float first had an entitlement to use it. This debate originated in an article in issue 12 of the Trett Digest, when Roger Trett argued that the contractor may claim the float on the basis that he prepared the programme and therefore, created the float. Tony’s suggestion was that, in the absence of any words in the contract to the contrary, the employer could also claim the float as his on the basis that he is, in effect, paying for the float and is an equal party to the contract.

We received several interesting responses to the article and these have addressed a variety of different aspects of the interpretation problems associated with programme float.

With regard to the ownership of float, Robin Marlow of AMEC BKW stated that "Planning is an informed guess…[in which] the planner will allow a contingency against the durations allowed….It thus follows that the float must belong to the contractor, not to the employer. Any other interpretation would be less inequitable". Roy Aspden also comments that " The contractor tendered the programme and owns all the float. If the employer wants ownership of some float to allow for his potential defaults then he needs to instruct the contractor". Finally, Andre Zijderveld of Bayards Aluminium Construction BV is of the opinion that " The contractor submits the programme showing the float…If there are no objections of the employer [then the employer] agrees that the float belongs to the contractor and [the employer] is no longer entitled to the rights of using the float. The ownership of the float is mutually agreed to be that of the contractor".

In response to Tony’s statement that the employer got to the float first and hence obtained the benefit, Roy Allen of John Mowlem & Company PLC disagrees stating that " There is no logic in the argument that the first delay to occur ‘gets to the float’". Roy Aspden also disagrees. "The commercial benefits of ‘first come first served’ shared ownership of float favours the earliest delayer, so get your delays in first must be the maxim - but this would have the very effect of encouraging delays". Agreeing with these views, Malcolm Robinson of MSR International Consultancy believes that "it is contractually irrelevant who gets to any float first". I still have a nagging doubt on this point because some contracts say that if the regular progress of the work is delayed (at any moment in time) and this affects the completion date, then the completion date should be adjusted. Hence if the delay is early and there is float, no overrun will occur and so no extension is warranted.

With reference to basic legal principles, Malcolm Robinson refers to "the [idea] of damages [being to] put the contractor back in the contractual position he was in before the event arose". Roy Allen contributes "the general principle of law in relation to damages for breach [of contract] is to restore the injured party to the position it would have been in had the damage not occurred. Thus, had the employer not been in breach then the contractor would have finished by the due date even though he used his float". Applying this principle to the example adopted Alan Whitaker of Alan E Whitaker & Associates observes that "To put the contractor back into the position he was in before the delay occurred he needs a four week extension of time to reinstate the conditions upon which the contract was let i.e. twelve weeks in which to complete the work"
On the subject of the entitlement to float, Malcolm Robinson is of the opinion that "float is available to the contractor to accommodate unforeseen problems such as delays…thereby giving relief from damages. The contractor is entitled to the full stated contract period to complete his contracted work and obligations plus any further time arising out of variations and/or delays caused by the employer’s representatives". Roy Allen also addresses the same issue, "It is not logical that the contractor should be deprived of the float period to cover for the risks which are his to bear under the contract….The obligation upon the contractor in the example given is to complete within three months. The employer cannot then, after submission of the programme, effectively impose a new term to complete within two months. In this sense the float shown on the contractor’s programme is his own and cannot be taken over by the employer".

Another issue raised by readers’ replies was the actual order of the delays. Roy Allen argued that "if the same example is worked with the delays reversed then presumably [the] logic [adopted for the example] would result in the conclusion that the contractor is entitled to an extension of time because the employer caused the overrun. I cannot see the logic in a different entitlement arising purely due to the order of the delays". On the same subject, Roy Aspden states "Suppose the magnitudes involved were put on a different scale, say hours instead of months. Does it really hold water to say that a morning default by the employer followed by an afternoon default by the contractor should be valued differently if the events were reversed on the same day". This is a very good point.

This issue of float can also be viewed against the background of the various standard forms of contract. Mike Hamilton of Watson Steel Ltd contributes "in respect of ICE 6th Edition Clause 44 [extensions of time]…In the sample analysis there is no doubt that the contractor has suffered a delay….The argument is [ whether this] fairly entitles the contractor to an extension of time." He continues that "it seems to be inequitable for the employer not to award the entitlement on the basis of the float [as it would only leave the contractor with two options] e.g. accelerate to ensure that he still has some float for possible risk of overrun or problems of his own; or carry on in the hope that everything goes well." His concluding argument is "why should the employer profit because of his own failure!".

A similar argument is put forward by Roy Allen whose conclusion is based upon the provisions of ICE 5th and 6th Editions. "Essentially the ICE contracts provide in Clause 44 the basis for awards of extensions of time. Nowhere in Clause 44 is mention of any programmes referred to in Clause 14. The programme is not a binding contract document, merely a statement of the contractors intentions. [Therefore], there is no linkage between the entitlements to extensions of time and programmes submitted in accordance with Clause 14."

One final argument raised relates to the actual inclusion of float within the programme. Alan Whitaker believes that "all programmes should include a period of time at the end where no planned work is to occur (call it float if you wish) because that demonstrates that the contractor has made some contingency, time-wise, for those matters of possible delay for which he has no redress under the contract." Richard Gill of Amec Design & Management Ltd points out that "Although part of the activity is indicated as float the whole activity belongs to the contractor. He is not asking for a new completion date, he is stating that he requires two months to be available to him." Andre Zijderveld says that "Today, I still build float in every programme but do not let it show. I am aware that I can use this float for negotiating purposes as well as for delays. I use it as time to play with depending on the situation" He continues, "If it is necessary to show a float to my employer, I will take care that contractually I am the owner of the float and reflect it in what circumstances I will use the float." Richard Gill feels that the float can only be shown to the employer to the advantage of the contractor in certain circumstances. "The only benefit of showing part of the bar as float is to tempt the client that an earlier finish may be possible.".

Not a single response in support of Tony’s case was received (where are all the defenders of the employers’ position?), but I do not believe this reflects the strength of the contractors’ case. I have therefore sought a final judgement from an eminent lawyer. ... his opinion will appear in the next Trett Digest.
 
Clare Williams has recently completed the Legal Practice Course at the College of Law, Chester. She is gaining construction and claims-related experience in Trett Consulting’s North West office whilst seeking a training contract with a firm of solicitors. (Offers please to 0161 928 9004)