In Short
- Construction float refers to extra time built into project schedules to accommodate delays.
- Managing float effectively reduces project risks and potential penalties.
- Contractors should clearly outline float provisions in contracts to avoid disputes.
Tips for Businesses
Ensure that float provisions are clearly defined in your construction contracts. This allows flexibility to manage delays without facing penalties or disputes. Regularly monitor project timelines and use float strategically to protect against unforeseen challenges and keep the project on track.
In the complex world of construction, time is a critical factor that can make or break a project’s success. One crucial concept that plays a significant role in managing time effectively is ‘construction float’. This article delves into the intricacies of construction float, its importance, and the various perspectives on its ownership and application.
Understanding Construction Float
Construction float, often simply referred to as ‘float’, is a period of time built into a project schedule that allows for flexibility in completing certain tasks without delaying the overall project completion date. It serves as a buffer against unforeseen circumstances, such as adverse weather conditions or unexpected delays in material deliveries.
The Importance of Float
Float plays a crucial role in risk management for construction projects. It provides contractors with a safety net to absorb minor delays without jeopardising the project’s timeline. This buffer can be particularly valuable in dealing with:
- weather-related delays;
- material supply chain disruptions;
- labour shortages or industrial action;
- unforeseen site conditions;
- changes in project scope.
By incorporating float into the schedule, contractors can better manage these risks and maintain project momentum even when faced with unexpected challenges.
Continue reading this article below the formWho Controls the Float?
One of the most contentious issues surrounding construction float is the question of ownership. Construction float is typically considered the contractor’s asset, serving as a buffer in their project timeline. The client cannot unilaterally appropriate this float and demand an earlier project completion. However, it is crucial for both parties to engage in open discussions about project scheduling. Whether you are the client or the contractor, it is advisable to ensure that the contract includes clear provisions regarding float usage and ownership. There are three main perspectives on this matter:
- Contractor Ownership: Proponents argue that since the contractor develops the project schedule and factors in the float, they should have the right to use it for risk management and schedule adjustments.
- Principal (Owner) Ownership: This view suggests that because the float is incorporated into the contract price and schedule, the principal should have control over its use to manage costs and progress.
- Shared Ownership: Some argue that neither party exclusively owns the float and that it should benefit the project as a whole.
The lack of clear ownership can lead to disputes and uncertainty during project execution. Therefore, it is crucial for contracts to address float ownership and usage explicitly.
Whether you’re a small business owner or the Chief Financial Officer of an ASX-listed company, one fact remains: your customers need to pay you.
This manual aims to help business owners, financial controllers and credit managers best manage and recover their debt.
Contractual Implications of Float Ownership
How the float is treated in a contract can significantly impact how extensions of time (EOTs) are granted and how delays are managed. There are two primary approaches:
- Contractor-Friendly Approach: When a contract stipulates that an EOT may be granted whenever the contractor experiences a qualifying delay, regardless of whether it affects the completion date, the float remains intact for the contractor’s benefit.
- Principal-Friendly Approach: If the contract specifies that an EOT is only granted when a delay affects the project’s completion date, the float must be exhausted before an EOT is considered. This approach effectively gives the principal control over the float.
These contractual nuances can have far-reaching consequences on project management and dispute resolution.
Best Practices for Managing Construction Float
To effectively utilise construction float and minimise disputes, consider the following best practices:
- Clearly define float ownership and usage in the contract.
- Regularly update and communicate the project schedule, including float consumption.
- Use float judiciously, prioritising its application to high-risk activities.
- Maintain detailed records of float usage and the reasons behind it.
- Foster open communication between all project stakeholders regarding float management.
Key Takeaways
Construction float is a valuable tool in project management, providing flexibility and risk mitigation. However, its effectiveness hinges on clear contractual definitions and mutual understanding between parties. As the construction industry evolves, so must our approach to managing float. By addressing float ownership explicitly in contracts and adopting best practices in its management, project stakeholders can harness the full potential of this crucial scheduling concept, leading to more successful and harmonious project outcomes.
If you have questions about construction float, our experienced construction lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1800 875 477 or visit our membership page.
Frequently Asked Questions
Effectively managing float reduces the risk of project delays, penalties, and disputes. It ensures that unexpected delays do not push back the final delivery date and helps contractors keep projects on track.
Typically, the contractor manages the use of float in the project schedule. However, clearly defining float usage and responsibilities in the contract ensures both parties understand how delays will be managed, preventing future disputes over timeline changes.
We appreciate your feedback – your submission has been successfully received.
