Guild of Project Controls: Compendium | Roles | Assessment | Certifications | Membership

Tips on using this forum..

(1) Explain your problem, don't simply post "This isn't working". What were you doing when you faced the problem? What have you tried to resolve - did you look for a solution using "Search" ? Has it happened just once or several times?

(2) It's also good to get feedback when a solution is found, return to the original post to explain how it was resolved so that more people can also use the results.

Delay compensation or not when baseline had float?

7 replies [Last post]
John Reeves
User offline. Last seen 2 weeks 5 hours ago. Offline
Joined: 10 May 2013
Posts: 204
Groups: None

just would like a general opinion on this issue.  In short on DT3, the Contractor Submitted a Baseline that had 3 months float.  The work was dependent on the big contract moving a sewer first, which they are now moving that 3 months later.  One opinion is the contractor gets $0 because they provided 3 months float.  Another opinion, (the contractor’s mainly) is they should get compensation for labor rates going up over that period.  What is your opinion?  who is right?  (Personally I think the contractor should not have provided float, but - I have been on jobs where the Subst. Cpl requ was just way too out and then you run into problems proving delays because your activities are too long and not as planned.   And if you thought they deserved compensation, wouldn't you have to wait to make there is not concurrent delays in that future period?

Replies

Zoltan Palffy
User offline. Last seen 2 days 22 hours ago. Offline
Joined: 13 Jul 2009
Posts: 3052
Groups: None

theoretically there is no increased costs with sliding the work of the GC and the subs 3 months to the right.

1. If the scope the same ? if yes then no additional costs its the same amout of manhours

2. There could be and increased seasonal cost depending on the the work and the season. I.e if concrete work was scheduled for the fall and is now pushed into the winter thne there can be increased cost for calcium chloride to maintain the temperature of the concrete and also winter protection such as thermal blankets or temporary heat. 

3. Back to the escalation clause is there and escalation cluase ?  Especiall if there was a labor wage rate increate where lets sa the labor rate of a brick layer was lets says would have been $20.00 per hour 3 months ago and is not $21.00 per hour then the contractor would be entitiled to that $1.00 per hour additional costs being incurred.

4. The same principle apples to material lets say that you did not want to buy copper for the job too soon and 3 months later the cost of copper wire sky rocketed or there is a supply chain issue. Certainly a contractor could go after these costs. However a owner could argue that you should have locked in those prices and bought out the job 

5. If the push of the 3 months calused stacking of trades then the contractor could possible claim additional monies for additional supervision becasue you now have additional crews. The same holds true for equipment and small tools. Maybe now you need 4 sissor lifts instead of 2 because you have more work going on currently.

Bottom line

If slippage to the interium milestone by 3 months did not push the overall completion date then there will not be any compensation for extended overhead or extended general conditions. That does not mean that there may not be cost assoicated with delaying the interium milestone by 3 months you just have to show what it would have been not for the slippage and what it will be now 3 months later.

 

John Reeves
User offline. Last seen 2 weeks 5 hours ago. Offline
Joined: 10 May 2013
Posts: 204
Groups: None

OK, there is a extra complication.  We know the owner used the float first so in that case the contractor should get nothing when it slides.  BUT, in this (theoretical) case there is a complication.  There was an interim milestone that the contractor would access to an area.  Now they are not getting access to that area 3 month later - that is why owner is using up the 3 month float and forcing the contractor to use all of their float and sliding all the operations 3 months later.  So the deals the contractor made with its subs are sliding the subs work later and the contractors subs are charging the contractor more.  The increased costs to the GC are real.  But does the GC have any right to re-coup those costs from the Owner when it was simply an attempt to save themselves money on the project.  Does the interim milestone change this situation legally?  - even though the float belongs to "the project"  

John Reeves
User offline. Last seen 2 weeks 5 hours ago. Offline
Joined: 10 May 2013
Posts: 204
Groups: None

I have a follow up question.  So you don't give the contractor any money when the Owner uses all of the baseline float for a change.  The next month the contractor is behind on submittals.  Could this be a concurrent delay, or as some call it a parallel delays where there are two delays but not in the same month.  They are in same path because the owner delay the previous month effected all activities.  Is the contractor simply causing a delay and it is not concurrent - technically that sounds true - do they have any recourse.  I would assume they could claim parallel delay or concurrent delays but it is not a classic case.

Zoltan Palffy
User offline. Last seen 2 days 22 hours ago. Offline
Joined: 13 Jul 2009
Posts: 3052
Groups: None

answers/replies to your questions/statements

1. escalation caluse: - interesting you mentioned that there is, the NTP was delayed - and that one is agreed and being payed.  -  I guess in some ways the later claim could be either concurrent or double dipping...not really, but a little. 

How long was the NTP delayed ? how much time of this is part of the 3 months ?

2. They should be able to proved the durations with commodity curves - I am assuming if he is due, this helps quantify it sort of but I assume this is an issue only if he is due not prove that he is or not.

Yes they should be able to prove the durations where is teh backup for the durations I an put 1 day duration on evey activity but I would need to see the backup supporting the durations with quantities, installation rates and manpower. Once you have thsi you can measure how they performed against the planeed installation rate. Commodity curves, exvacation, pipe etc.

3. If you approved the baseline with the 3 months of float in it than thats water over the damn moot point. - A moot point for which party?  this is the issue, the contractual Subst.Cpl remains the same, I assume this means the owner wins this arguement as does #4.

Usually there is a preliminary schedule which represents the 1st 90 days of the work. This is then expaned to include the whole project scope of work. If you approved it then you bought it did you do your due dilegence as stated in item #2 ? If may have jumped out at you. 

4. what does your specification say about who owns the float ususally it says it belongs to the project. But in reality it us owned by whomever uses it first.  - this supports the owner, claim not valid.

I dont think that the owner can own the float check teh specifications. If the contractor has a better mouse trap and can build something faster then he has the RIGHT to finish early you can not take this away form him. Lets say that I was going to build something and I decided to use a Pre-fabrication shop instead of the convential stick building method and I saved 3 months of time by pre-fabricating it. Thats is the contractors time savings due to means and methods and you can not take that right away from  him. By doing so you have prevented him from moving onto another projects and also has extended overhead conditions which are not necessary. If it turns out to be cheaper you could possible argue that this should be sumbited as value engineering option and the cost savings and time saving is usually split between the owner and the contrctor.

John Reeves
User offline. Last seen 2 weeks 5 hours ago. Offline
Joined: 10 May 2013
Posts: 204
Groups: None

Answers/replies to your questions/statements

1. escalation caluse: - interesting you mentioned that there is, the NTP was delayed - and that one is agreed and being payed.  -  I guess in some ways the later claim could be either concurrent or double dipping...not really, but a little.

2. They should be able to proved the durations with commodity curves - I am assuming if he is due, this helps quantify it sort of but I assume this is an issue only if he is due not prove that he is or not.

3. If you approved the baseline with the 3 months of float in it than thats water over the damn moot point. - A moot point for which party?  this is the issue, the contractual Subst.Cpl remains the same, I assume this means the owner wins this arguement as does #4.

4. what does your specification say about who owns the float ususally it says it belongs to the project. But in reality it us owned by whomever uses it first.  - this supports the owner, claim not valid.

Zoltan Palffy
User offline. Last seen 2 days 22 hours ago. Offline
Joined: 13 Jul 2009
Posts: 3052
Groups: None

1. see if there is an escalation caluse in the contract.

2. You can not dictate means and methods if he has a better and faster way to do something you can not penalize him for that. They should be able to proved the durations with commodity curves whihc is based on quantity of installation as it progresses over the length of time. This will give you installtion rates per day or per week. The rates should be based on quantities and the manpower associated with that commodity to install that commodity at that rate. 

3. If you approved the baseline with the 3 months of float in it than thats water over the damn moot point. 

4. what does your specification say about who owns the float ususally it says it belongs to the project. But in reality it us owned by whomever uses it first

5. The concurrency period has passed so you cant use that argument 

Zoltan Palffy
User offline. Last seen 2 days 22 hours ago. Offline
Joined: 13 Jul 2009
Posts: 3052
Groups: None

1. see if there is an escalation caluse in the contract.

2. You can not dictate means and methods if he has a better and faster way to do something you can not penalize him for that. They should be able to proved the durations with commodity curves whihc is based on quantity of installation as it progresses over the length of time. This will give you installtion rates per day or per week. The rates should be based on quantities and the manpower associated with that commodity to install that commodity at that rate. 

3. If you approved the baseline with the 3 months of float in it than thats water over the damn moot point. 

4. what does your specification say about who owns the float ususally it says it belongs to the project. But in reality it us owned by whomever uses it first