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Terminal Float - Increase in Duration

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Senthil Maharaj
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Dear All Planning Planet Users,

I understand that the contractor own the Terminal Float and I understand that if there was a compensation event that impact the planned completion date, the contract completion date will be impacted by the same amount of time. but if the planned completion has been brought forward due to combination of efficient working and client giving access early etc, can the Terminal Float be extended?

We have a situation where-in the Planned Completion has been brought forward (ahead) and we are soon hit by a CE that almost consumes the time saved before. The contractor claims that they are entitled to a EOT and Target increase as their Terminal Float is now longer. My case in defence is that the planned completion is not going to any later than the original planned completion and so the Contract Completion should not be impacted. Can you please throw in your expertise to say if I have a contractually valid point to defend my case. 

below is a rough illustration of the situation showing the original, last accepted, impact and what the client case of defence. Any input is greatly appreciated. 

 

Many Thanks

Senthil

6321
impact_illustration.jpg

Replies

Zoltan Palffy
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As Tom has stated it might be good to review the contract. Typically you can not take away the right for the contractor to finish early. 

Tom Boyle
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Senthil,

You might need to have some internal discussions about what is meant by "does not seem fair to the Client," perhaps accompanied by a close reading of the Contract.  Does your Client believe the only fair solution is to demand an additional week of critical-path work without granting an additional week of time to accomplish it?

Zoltan Palffy
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I think Tom has it correct of you are using NEC 

Zoltan Palffy
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I think Tom has it correct of you are using NEC 

Senthil Maharaj
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Hi Zoltan,

The early planned completion was accepted in the form of Last Accepted programme.

I like it when you say the no time extesion. It will be great to know if there is any contractual ground to say no to the Contractor. We are using NEC contracts and the contractor is claiming their entitle ment. The confidence level on the project is very high at the moment and the contractor may not even need their terminal float but it is their entitlement they are asking for.

Many Thanks for your time on this. much appreciated.

Senthil Maharaj
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Tom, Many Thanks for your detailed response. It makes sense but it does not seem fair to the Client.

Tom Boyle
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Senthil,

If you are using NEC - and there are no particular conditions to the contrary - then the Contractor's claim appears reasonable.

As I understand NEC:

1. Terminal Float is not comprised of a specific time interval.  Rather, it is the interval between the planned completion and the contract completion, whatever that happens to be at the time the schedule is updated. (It is a dependent variable, not an independent one.)

2. If the Contractor manages to complete some work ahead of his original plan (in the absence of a scope change or other CE), then any acceleration is essentially treated as unused time risk allowance, which aggregates to the Terminal Float.

3. Ultimately, the Contractor is entitled to manage his own time risk for the entire period of performance.  If his aggressive actions to mitigate risks early in the project lead to an increased (Terminal Float) buffer for managing later risks, the Owner is not entitled to the swoop in and steal these benefits with a well-timed scope increase.

Other contract forms do not provide this kind of explicit protection, so Contractors are induced to be much less transparent in their schedule risk management.

[Edit: Zoltan and I were replying concurrently.]  Unfortunately, the dominant scheduling software  - as used by most planners - does not distinguish between Terminal Float (owned by the Contractor) and Total Float to the Planned Completion (owned by the Project).  (AACE uses "Project Float" and "Network Float" for these two terms.)  If a P6 schedule includes the Contract Completion in any way (e.g. as a constrained completion milestone or a project must-finish-by constraint), then the Total Float of all activities is typically increased by the amount of Terminal/Project Float.  (An adjustable late-constraint on the Planned Completion Milestone must then be used to remove it, and such a constraint would be frowned on by most Owners and schedule consultants.)  This can make it difficult for a Contractor to preserve his rights in the face of explicit, "Total Float belongs to the Project," Contract language.

Zoltan Palffy
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There are 2 very important aspects of this

1. From a contractors perspective you can not take away his right to finish early. Finishing early means that his overhead cost will be reduced and he can start on aonther project sooner.

2. Form an owners perspective the specifications usually state that float is jointly owned commodity and shall be used by the project.

in Item #1 what did the contractor do to bring the completion date back sooner ? Was this schedule do able or was it just on paper and did anyone every APPROVE the improved earlier completion schedule ? From your graphic it looks like it was approved.

The Original plan was to finish the project 1 week earlier than the contractual completion.

The Last Accepted schedule was to finish the project 2 weeks earlier than the contractual completion.

Then an event happened what is not clear is whne bouth of the impacts occured. From the graphics it looks like they both happened during the same time frame. In this it would be a concurrent delay on the owner AND the contractor.

Hind sight is 20/20 so what should have been done is the approval of the earlier schedule shoudl have also revised the contractaul completion date and a new line in the sand would have been drawn. Then any impacts would be measured against this NEW date.

Going strictly by item #2 if there was more float created by the earlier completion schedule then this additional float benefits the project and is project owned. NO TIME EXTENSION will be given until ALL of the avaliable float is exhausted. The owner did not request the contractor to finish early he took it upon himself to do so. 

Going back to the the original schedule if there was never any earlier completion schedule than what was originally submitted and if the contractor was impacted (by the client) 1 week would there be a time extension ? NO there would not be because the client just used the available float.

Going back to the the original schedule if there was never any earlier completion schedule than what was originally submitted and if the contractor was impacted (by his own doings) 1 week would there be a time extension ? NO there would not be the contractor just used the available float.

So using this same logic with the earlier schedule which is now 2 weeks earlier than the original paln the answer remains the same. 

If ANY schedule is pushed out past the ORIGINAL completion date then only that portion which is beyond the completion date would be require a time extension. 

It is hard to tell from your graphic but it looks like there is 1 week  worth of delay time that need to be analysed.

The way that it drawn there is a concurrent delay during week #2 therefore there should be a 1 week time extension grated but since the 1st week was concurrent and the total delay was only 1 week the time extension would be considered non compensable. So time but no money for extened overhead or extened general conditiions.

The last question is what can be done to bring this date back in line with the original completion date ? Can you fast track the schedule and or crash the schedule ? If so how much will this cost to do and what are the risk factors and the confidence level. to make this happen ?

just my 2 cents