1 Float Ownership in Construction Project Khalid Al-Gahtani

2 Total Float Legal Difficulties Who own As-planned TF? –Contract Terms –Type of Contract (Project Risk) How to fix responsibilities of TF Change? –Owner, or –Contractor

3 TF Increase with CP delay Activity A Activity B Activity C Activity D Activity E Activity F Original TF

4 TF Increase with CP Delay Activity A Activity B Activity C Activity D Activity E Activity F Increased TF Delay Original TF

5 TF Decrease with CP Acc. Activity A Activity B Activity C Activity D Activity E Activity F Original TF

6 TF Decrease with CP Acc. Activity A Activity B Activity C Activity D Activity E Activity F Original TF Reduced TF Acceleration Adjusted TF

7 TF Increase with NCP Acc. Activity A Activity B Activity C Activity D Activity E Activity F Original TF

8 TF Increase with NCP Acc. Original TF Increased TF Adjusted TF Activity A Activity B Activity C Activity D Activity E Activity F Acceleration

9 Total Float Computational Difficulties How distribute As-Planned TF value between: –Owner/Contractor(s) –Owner/Contractor(s)/Subcontractor(s) How to calculate TF Change How to distribute responsibilities of TF Change

10 Issues of TF Calculation in CPM Issues associated with float in CPM –Activity Constraints –Different Calendars on the schedule. –Lag Calendar –Methods for Updating Project Schedule. “Retained logic” or “Progress override” –Late Dates Scheduling. –P6 Time Calculations

11 Influence of TF on Project Risk Float Consumption, Time Project Risk, $ References (Gong 1997; Gong and Hugsted 1993; Gong and Rowings 1995; Lockhart and Roberds 1996; Zhong and Zhang 2003)

12 Float Ownership Issues Issues associated with float ownership –Resource leveling –Change Order –Increase Risk for the bearing party –Float Distributions among project parties –Prevent “Schedule Games” –Changing Float

FLOAT ALLOCATION APPROACHES Owner Ownership Float Approach Contractor Ownership Float Approach Project Float Approach Bar Approach 50/50 Allocation Approach Commodity Approach Path Distribution Approach Contract Risk Approach Total Float Management Approach Total Risk Approach 13

14 Float Ownership Concepts

15 Define responsibilities of TF Changes Delay/Acce. Type Credit/Discredit to: EC DelayOwner NE DelayContractor EN DelayWho own the Float Owner-directed-accelerationOwner Contractor AccelerationContractor Schedule AccelerationWho own the Float

16 Project Start Contract Type Cost+FeeLump Sum Owner owns the float Contractor owns the float % Maximum Distribute the float Owner % General Contractor % Distribute the float among the rest of the project parties Subcontractor % Other Contractor % General Contractor % Day-by-day + Commodity Analysis END

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18 TF Ownership Example The following is an illustrative example of how the Total Risk Approach will be applied in a small project shown in Figures 3-5 to Figure 3-5 shows the CPM network for a factual project. The project assumes to follow a Traditional Delivery System that has the following types of contracts: –The contract between Owner and General Contractor is a Guaranteed Maximum Cost Contract, so both contract parties agree to share the project risk by 50%. –The contract between General Contractor and Subcontractor A is a Guaranteed Maximum Cost Contract, so both contract parties agree to share the project risk by 50%.

TF Ownership Example 19 The contract between General Contractor and Subcontractor B is a lump-sum. All the above contracts assume not have any protective terms that shift the risk to another party. The project As-planned Schedule The example has the following paths and associated float times: −CP = A-B-C-D = = 20 days −NCP1 = A-E-C-D = = 16 days (TF=4) −NCP2 = A-E-F-D = = 14 days (TF=6) −NCP3 = A-G-H-D = = 12 days (TF=8)

20 TF Ownership Example Figure 3-5: CPM As-planned schedule for the applied example

The next step is distributing the float of the nearest first critical path, which yields the following calculations:  TF (Owner) = = 2 days  TF (General Contractor) = = 1 day  TF (Subcontractor A) = = [4-2-1] = 1 day 21 TF Ownership Example

22 Figure 3-6: Update the As-planned schedule to distribute the second nearest critical path TF Ownership Example

After distributing the nearest first critical path, the CPM as-planned schedule is updated (Figure 3-6) to distribute the float of second nearest critical path. After updating the CPM schedule, the project paths are updated as following: –CP1= A-B-C-D = = 20 days –CP2 = A-E-C-D = = 20 days –NCP1 = A-E-F-D = = 18 days (TF=2) –NCP2 = A-G-H-D = = 12 days (TF=8) 23 TF Ownership Example

24 Figure 3-6: Update the As-planned schedule to distribute the second nearest critical path. TF Ownership Example

Now the second update schedule of previous steps becomes the first nearest critical path. The following calculations are followed to get the float distribution of this path float:  TF (Owner) = 5/5 = 1 days  TF (General Contractor) = 5/5 × 2 × 0.5 × 0 = 0 day  TF (Subcontractor B) = 5/5×2×0.5×1= [2-1] = 1 day 25 TF Ownership Example

26 Figure 3-7: Update the As-planned schedule to distribute the third nearest critical path. TF Ownership Example

The last path of the example project can be distributed by updating the previous updated as-planned schedule as shown in Figure 3-7. Now the new updated schedule has the following paths: –CP1= A-B-C-D = = 20 days –CP2 = A-E-C-D = = 20 days –CP3 = A-E-F-D = = 20 days –NCP1 = A-G-H-D = = 12 days (TF=8) 27 TF Ownership Example

As a result, the following calculation can be applied to distribute the float of the last path on the project:  TF (Owner) = + = 4 days  TF (General Contractor) = + = 4 day 28 TF Ownership Example

Figure 3-8 represents graphically the final TF distributions, using a bar chart technique. The example paths after distribution can be represented as follows: –CP= A-B-C-D = = 20 days –NCP1 = A-E-C-D = = 16 days (TF=4; OW=2, GC=1, SA=1) –NCP2 = A-E-F-D = = 14 days (TF=6; OW= 3, GC=1, SA=1, SB=1) –NCP3 = A-G-H-D = = 12 days (TF=8; OW=4, GC=4) 29 TF Ownership Example

30 Figure 3-8: As-planned bar chart for the example project A B C D E OW GCSA F OW GCSAOWSB G OW GC H OW GC Legends: OW= Owner’s Float, GC= General Contractor’s float, SA=Subcontractor A’s float, SB=Subcontractor B’ float TF Ownership Example

The first analysis schedule happened in day 7 of the analysis schedule (Figure 3-9). The owner caused a 2 Excusable Compensable delay (EC) in the activity B start time. As a result, all the noncritical paths on this example have been increased by 2 days on their float as shown in the following calculations: –CP= A-B-C-D = 5+ (6+2)+7+2 = 22 days –NCP1 = A-E-C-D = = 16 days (TF=6; OW=4, GC=1, SA=1) –NCP2 = A-E-F-D = = 14 days (TF=8; OW= 5, GC=1, SA=1, SB=1) –NCP3 = A-G-H-D = = 12 days (TF=10; OW=6, GC=4) 31 TF Ownership Example

32 Figure 3-9: Day 7 analysis on the example project Legends: OW= Owner’s Float, GC= General Contractor’s float, SA=Subcontractor A’s float, SB=Subcontractor B’ float, NE=Nonexcusable Delay, EC=Excusable and Compensable Delay A EC B C D E OW GCSAOW F GCSAOWSBOW G GC OW H GC OW TF Ownership Example

The next updated schedule occurred on day 10 when the Subcontractor A consumed 3 float days on the activity E (Figure 3-10). As a result, the noncritical paths affected are as follows: –CP= A-B-C-D = 5+ (6+2)+7+2 = 22 days –NCP1 = A-E-C-D = 5+(2+3)+7+2 = 19 days (TF=3; OW=4, GC=1, SA=1-3=-2) –NCP2 = A-E-F-D = 5+(2+3)+5+2 = 17 days (TF=5; OW= 5, GC=1, SA=1-3=-2, SB=1) –NCP3 = A-G-H-D = = 12 days (TF=10; OW=6, GC=4) 33 TF Ownership Example

34 Figure 3-10: Day 10 analysis on the example project Legends: OW= Owner’s Float, GC= General Contractor’s float, SA=Subcontractor A’s float, SB=Subcontractor B’ float, NE=Nonexcusable Delay, EC=Excusable and Compensable Delay A EC B C D E NE F SBGCOW G H TF Ownership Example

As show in the calculations, –the Subcontractor A consumed 2 disentitled days. –Consequently, this consumed float has been taken from other shared parties on this path (owner, General contractor, and Subcontractor B) 35 TF Ownership Example