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Change In Critical Path and Float?

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Mark Ngan
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Hello Fellow Planners,

I am currently assessing a Claim whereby the Critical Path has changed due to the use of float. Can anyone advise me on the principles?

1. I have two sites (say A & B) which are in separate locations but have one Contract Completion Date.

2. The Contractor submits baseline programme showing both sites with no float ie. both are Critical.

3. Delay occurs in Site A (Say 20 days but has not been awarded) and becomes the "Critical Path".

4. Contractor changes duration of work in Site B parallel to the delay in Site A (therefore using the available 20 day float) so that works in Site B will now finish together with Site A.

5. Delay now occurs in Site B (Say 10 days) after the changes in duration of works within Site B such that the Critical Path has now moved to Site B. Change in Critical Path from Site A to Site B)

6. Total delay to the project (Site B Critical Path) is now 30 days whereas if the contractor had carried out works as shown in baseline programme, then Site B should actually have 10 days float instead of being in delay.

Who is entitled to the Float due to first delay?
and can a Contractor use float which has not been awarded to them?

Look forward to your advice.


Regards

Mark

Replies

David Bordoli
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How about looking at the problem this way:

Site A was delayed by an employer event by 20 days and an extension of time issued. The new Contract Date, for both sites is +20 days.

Then Site B is not reprogrammed to ‘pace’ Site A but suffers a contractor culpable delay of 20 days (say the failure of a piece of plant or whatever).

So far so good, no problem, no bad faith and so on.

Now, if the employer sticks in the variation for Site B then that variation will cause Site B Contract Date, and the project in general, to be +20 +10.

I think the contractor in this case was being ‘canny’ but unless there is anything untoward in the contract then I think this is a prime example of claimsmanship for which there is no remedy. There as been talk of ‘approved’ programmes but, unless I am mistaken, in most UK contracts at least, the programme is not a contract document and there is not compulsion for the contractor to work to anything other than the Completion Date.

I am trying to judge the way the wind is blowing with regard to Time Impact Analysis at the moment so don’t shoot me down if you are of the opinion that it has had its day. But we should strive to assess delays and their effects at the time they happen and taking account of the status of the project at that time – warts and all. If the contractor was ahead of programme on Site A when the initial employer event impacted there would be no worries about whether the employer should or should not be able to use that extra generated float to reduce the potential effects of the delaying event.

I think the contractor was sneaky in what he did but could not foretell at the time he ‘paced’ Site B that the further delaying event would occur. Hindsight is a fantastic thing but I think it is okay for him to have had the expectation that there would not be any more delays (otherwise we would all need to put some contingency float in just in case). I also assume that it was commercially sensible for the contractor to ‘pace’ the sites (or why would he do that) and would we deny anyone the right to do that or should we expect them to make progress just for the sake of it.

Regularly and diligently also, I believe, should be measured in relation to achieving the Completion Date, not finishing early as would have been the case if the original programme was maintained.
Mark Ngan
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Hi Clive,

To answer your questions.....

1. There was only one completion date for the works but two separate locations (A & B).
2. The Client signed off on the programme acknowledging that there was a delay but not necessarily entitlement.
3. An award and extension was made but not the amount which the Contractor believed he was entitled to.

Following the award and extension, the Contractor continued to show negative float in Site A on the basis that he believed he was entitled to time, but whilst doing so he has "paced" works in Site B parallel to the negative float in Site A.

On the instruction of a VO in Site B, and following on from the Contractor’s "paced" works the Contractor moves the Critical Path from Site A to Site B.

I hope this clarifies things a bit more.

Mark

Clive Randall
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Andrew rasied a point here that I cant find an answer to
Was there two completion dates and possibly in turn was there LDs on each date?
This is pretty important.
I am also at a loss as to how the Client signed off on a programme that had 20 days of negative float.
Was he awarding and extension?
Did he ever award and extension.
I feel that before we get into discussions about float and drag and pacing its very important to understand the obligations regarding completion.
I feel we need some of the above questions answered or we are assuming too much
Cive
Mark Ngan
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Dear Stephen, Iftikhar and Andrew

Thank you all for your enlightening advice and comments.

May I just bring to light that the customer/employer did NOT approve the changes to Path B.

The activity in Path B took twice as long to complete than what was planned, with the duration being extended with every updated programme, so the employer was only aware of the change after it occured (every month).

I am now in the view that the Contractor may have "paced", but physically could not have completed the works in that activity as intended in the basline programme, based upon the actual site conditions and works carried out.

I believe the Contractor has used the float from Path A to cover inadequacies and poor planning in Path B.

The question is how do I prove this in view of the fact that the contractor is using float from Path A.

May I add that the float used is only alleged by the contractor and is in their view greater than that which has actually been awarded by the Employer in Path A. The Contractor is using float which has not been awarded.
Stephen Devaux
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Iftikhar,

If that is correct, then we are in violent agreement. :)

Maybe I’m just overlooking something (I’m getting old and slow and blind!), but from reading Mark’s posts, it’s not clear to me that the customer DID approve the changes on Path B. I think that’s where the issue of "who gets to use the float first" comes in.

This is clearly the nub of the issue. If the customer did NOT explicitly approve the changes ("pacing") of the schedule in Path B, then it seems to me that the contractor is at fault. If the customer did, then not.
Iftikhar Awan P.Eng.
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"Deciding to use up that float on Path B without a careful risk/benefit analysis of the dangers and cost of further slippage on that path might be very rash. If the project was very deadline sensitive (i.e., significant delay cost), it probably would not be wise to so willingly forego that reserve unless the remaining work/schedule was pretty assured. "

Stephen, I agree with your above assertion. In the subject case, the contractor’s revised programme showing using up of float on path B was approved by the employer, which shows that the contractor’s decision to use up float on path B was not rash - the employer agreed to it. In such a scenario, I believe that the employer cannot now retrospectively say that the contractor should not have used up the float on path B at all and thus penalize him.
Stephen Devaux
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"Believing that the delay was indeed caused by the employer, a contractor asks the employer for any additional costs associated with activities’ acceleration, a request that gets rejected. This causes the contractor to keep working with normal resource levels. This is probably what happened in case of the subject project."

Iftikhar, I think you’re right on the money here! The problem, however, lies not with project management, but with the way we write contracts. Most project contracts are simply not written in a way that tends to lead to a win-win result. All too often, what is good for the customer and what is good for the contractor are at odds.

In general, the customer wants the project finished as early as possible, and it can be worth a substantial amount to him for each week by which the schedule can be shortened (this is DRAG Cost). But shortening the schedule can have all manner of negative implications for the contractor (greater resource usage and cost, greater labour force volatility, sooner need to find other projects to utilize resources and continue cash flow, etc.)

The only way that a contractor will make such schedule-shortening decisions is if some of the benefit of the shorter project to the customer will accrue to him. This is indeed sometimes written into contracts as an early delivery incentive. But not often enough, and frequently the incentive amounts are inadequate to offset the negatives from the contractor’s viewpoint.
Stephen Devaux
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Iftikhar,

While understanding and sympathizing with your point, it must be remembered that one function of float is as risk mitigation -- ten days float is ten days of schedule reserve on Path B. On projects, the "unknown unknowns" will often get you.

Deciding to use up that float on Path B without a careful risk/benefit analysis of the dangers and cost of further slippage on that path might be very rash. If the project was very deadline sensitive (i.e., significant delay cost), it probably would not be wise to so willingly forego that reserve unless the remaining work/schedule was pretty assured.
Iftikhar Awan P.Eng.
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The idea of using DRAG as an additional parameter to focus attention on CP is an interesting one. It basically draws attention of schedulers towards "optimizing the schedule" and the project total cost versus total time curve.

However, even when a PM realizes the importance of crashing activities to reduce the project duration, he is not inclined to carry it out because of lingering final decision on EOT entitlement. Believing that the delay was indeed caused by the employer, a contractor asks the employer for any additional costs associated with activities’ acceleration, a request that gets rejected. This causes the contractor to keep working with normal resource levels. This is probably what happened in case of the subject project.
Iftikhar Awan P.Eng.
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Assuming that the contractor was not in a position to put Site A back on track thereby eliminating the delay caused by the variation for site A, it was reasonable for him to relax works on site B to match the progress of works for site A. It will not be deemed as the contractor not being diligent. A simple Snapshot analysis can prove this point. It is important not to think retrospectively while analyzing claims. The Contractor’s decision to use float available for site B was reasonable at the time of delay # 1 i.e. variation for site A. He had no knowledge at that time that another delay at site B is going to change the critical path from site A to site B. This principle should be kept in view while analyzing the contractor’s claim.
Iftikhar Awan P.Eng.
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Dear Mark,

If you want to prove that the contractor’s baseline for path B was inadequate, you would have to either develop a detailed baseline yourself (that substantiates your belief) or ask the contractor for Amplified Baseline schedule for path B. Using that amplified baseline, you would be able to point out specific scheduling deficiencies.

If the contractor continued to use up float on path B which had not been awarded to him, he was probably doing so under the belief that he would be awarded the EOT finally probably through arbitrtion etc. But, that should not be your concern.
Stephen Devaux
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"If the contractor is allowed to "pace" non-critical works, what is to stop them from "pacing" that activity until subsequent following activities become critical due to another employers delay. This could inturn create float in the original critical path, and the whole process could be repeated with the critical path changing back and forth."

From a project management (as opposed to contractual and forensic) viewpoint, this is where the canker gnaws. "Pacing" is precisely the demon described by Bill Duncan and myself in the article "Scheduling is a DRAG" at:

http://www.chiefprojectofficer.com/article/135

and by me in "DRAG Racing On The Critical Path" at:

http://www.projectsatwork.com/content/articles/234282.cfm

(The site of the second article requires registration, but it’s free.)

The project management nature of the problem (and a very common one even in non-contractual contexts!) is the overemphasis on float, a metric that is, by definition, not critical. "What gets measured is what gets emphasized." Thus, when Path A was extended by 20 days, the only quantified impact was NOT on Path A (which continued to have 0 float), but rather to give Path B 20D of float. Thus it no doubt seemed perfectly reasonable to allow that additional time (with possible cost benefit) on Path B.

If, alternatively, the change had been framed and quantified in terms of adding 20D of DRAG to Path A, the mindset MIGHT not have been to allow the extra time on Path B, so much as to reduce that 20D of DRAG now residing in Path A, with all the accompanying value of finishing earlier (lower overhead, sooner availability, delay risk retirement, etc.) than the 20D.

By the way, if you read the second of those to articles referenced, I believe you will find ABCP DRAG and DRAG Cost a very useful tool in describing quantifying the impact of delays in forensic analysis.
Andrew Flowerdew
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Mark,

I’m in agreement with Kinley. The contractor has to justify his adjustment of his activities, otherwise ignore them and work from the original sequence when working out any EoT.

Aslo check whether the original completion date was global or two dates given, even though they were the same date, individually for each section. I’m guessing one global date was given but if not you may be able to view each section seperately.
Mark Ngan
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Kinley

Thanks for your advice.

The contract does require the contractor to proceed regularly and diligently.

Regarding the float I believe it should be used in "good faith" as you say, although in my case the contractor has taken advantage of it.
Kinley Brown
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Mark

The contractor should be asked to provide valid justification for any changes to the sequence and timing of the works in order to prevent the situation you describe.

The contract may contain an express term requiring the contractor to proceed regularly and diligently with the work and this could possibly be used to prevent him pacing the non-critical works.

If the employer can demonstrate that he has suffered a loss as a result of the contractor breaching this contract term then he will be entitled to make a claim for the resultant damages.

You say that you consider the float is available to who ever uses it first, but this is subject to it being used in "good faith", at least I believe that is how it is dealt with by the US courts. This would prevent the contractor doing as you describe and reducing the float of the non-critical work.

Mark Ngan
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Hi Kinley,

To answer your questions:

1. The contract doesn’t deal with ownership of float (although we are in the view that the project owns the float and therefore whoever gets to it first etc.)

2. The Employer has approved the revised programme even though the first delaying event ie. EOT has not been awarded so the programme approved is shown to be in negative float. (should this have been approved?)

3. First delay was indeed an Employers delay i.e. a variation.

If the contractor is allowed to "pace" non-critical works, what is to stop them from "pacing" that activity until subsequent following activities become critical due to another employers delay. This could inturn create float in the original critical path, and the whole process could be repeated with the critical path changing back and forth.

Regards,
Mark
Kinley Brown
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Hi Mark

Does your contract deal expressly with ownership of float? Did the Employer approve the revised programme, is he required to under the terms of the contract?
Was the first delay an Employer’s delay?


Stretching the duration of non-critical works to fill float created by an Employer’s critical delay is very common and is known as "pacing". The use of the float by the Contractor in this way is generally allowed, subject to express contract terms stating otherwise.

However, it is important to investigate whether the contractor is actually pacing or was in concurrent delay, as this will generally affect his entitlement to prolongation costs.