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« Market for Building Tune-Ups Could Skyrocket: D'Antonio | Main | Our Project Has A Great WBS! »

12/30/2010

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Communication between the Owner and Contractor re: the early completion schedule would be critical. If not, there would be two schedules, 1: The one fulfilling the Contract Time and 2: The one the Contractor WANTS to achieve. If the Owner knows nothing about 2, and expects the Contract to be executed under 1, then there is no claim for delay damages by the Contractor for missing the dates desired in 2.

It would not be reasonable to expect any Owner to be held to a secret completion date! How would a Contractor respond if the situation was reversed?

If the Contractor sets a schedule that completes the project early, is the Contractor going to be willing to pay the additional costs of the Owner and the A/E firm for expediting their responsibilities quicker/earlier than the contract schedule requires?

Its the responsibility of the Contractor to inform the team of any updated schedules. When I mean team I mean Owner, Sub Contractor, Inspection entity, and finance institution as soon as possible to get the results the company is looking for. Communication and correspondences should be updated daily as to keep everyone informed as soon as needed.

Project float is not owned by the owner & or the contractor, 'but' the project float is owned by the 'PROJECT'

We would like to think that the owner has control over their project, but this not reality. Schedule is controlled more by the building inspectors, bank inspectors, suppliers and the weather than the owner. Other than mega projects, if a contractor completes a project ahead of schedule, he should consider himself fortunate and put it in his advertising.

As a AAA construction arbitrator and mediators of 25+ years I can tell you that claiming early completion, then owner interference and then claiming damages is a very common tactic, especially where contractual completion is not met. Unless the contractor shows his proposed early finish schedule very early in the project, and then demonstrates satisfactory progress on it, these claims generally fail. After the fact claims are generally always unsuccessful. This allows the Owner and design team to have input as to their impacts. That being said, once the project is handed to the contractor, project owners (and designers) are well served to facilitate the contractor's schedule to the maximum extent possible and obviously within reason. Some project owners specify a window of completion not just a drop dead date.

How about a contractor who claimed he could have completed the schedule early (there was an incentive to do so, but the city did not allow work on Saturday by a noise ordinance. In this case the city was the owner. how about the neighbors who wanted nice quiet weekends, could they sue when the city waived the ordinance. in today's litigious society anything can happen. (this was an actual incident long ago.)

What difference does it make whether or not the contractor would have finished early? If the owner delays work on the critical path then the owner has delayed the contractors completion of the work and therefore has caused an increase in field overhead. It doesn't matter whether he would have finished before the contract completion date absent the owner-caused delay. Of course there is the possibility that the contemporaneous and as-built schedules have different critical paths and the owner-caused delay that was critical on one schedule was not critical on the other. You have not addressed that issue in your article but it has to be addressed to make any sense out of the issue.


In most contracts, ownership of float belongs to the project. That means it is available for use by the contractor or the owner (whoever gets to it first). A contractor who submits a baseline schedule for acceptance by the owner which demonstrates early completion is really stating that their sequence of activities and durations are sufficient to support the early completion. If the early completion baseline schedule is accepted and the owner impacts that scheduled sequence or durations of the activities, the contractor is entitled to the direct costs of the impact. Only if the impact affects the critical path and extends the completion date or other contractual milestones beyond the contractual requirements is the contractor entitled to extended overhead cost.

During the baseline schedule submittal review process, the owner and the contractor need to make sure this point is clarified as to their position.

The supporting argument on the contractor's side is that the owner receives benefit for the contractor's early completion.

The supporting argument on the owner's side is that the contractor is lowering their overhead and indirect costs with early completion and inproving their profit potential.

The easiest way to get by this in my opinion is to accept the early completion baseline schedule and modify the contractual milestones to align. This way, there is no ambiguity in the ownership of float or the issue of schedule impact for the contractor. If the critical path is impacted by the owner and extends the contract milestone completion, it is a more definitive and standard process to recover extended overhead costs.

What is a contract completion date for if it can be manipulated by the contractor to request additional funds? Unless the accelerated schedule is submitted as a change request with adequate cost information, and accepted, the contract completion date would not change. This is very similar to a contractor using unacceptable submittals as leverage for claims for delays, or to use a lesser product. These tactics are not the sign of a responsible party to a contract.

If the contractor projects an early completion date, the owner does not delay the work and the date is missed resulting in longer than expected contract support by the owner, does the owner have the right to sue the contractor? The expedited schedule could have caused contract administration cost to be expended sooner (longer hours, weekends, etc) than expected and overages result due to the longer than projected by the contractor completion.

This is an age old dilema. Often times in order to secure a project in a very competitive environment, Contractors will establish a duration tha tthe project can be constructed in that is less than the contractual requiremetns in an effort to minimize General Condition costs and thus establishing a lower GMP. In some cases, the duration bid is realistic and in other cases, it may not be. The problems arise when the Owner or Design consultants do not possess the same sense of urgency in completing the Project in accordance with the established Early completion dates. The Best way that I have found to insure that some one recognizes the Project Float is to build a realistic Schedule that clearly shows the early completion Date and then create a Duration Hammock that establishes the overall float on the Project. Then you need to lay claim to that float in the Baseline Schedule Approval process. In my mind, the owner does gain benefit from a schedule that demonstrates an earlier than contracted or needed Scheduled completion but there may also be costs tot he Owner as well. The required by date may be in line with the end of a lease agreement, a scheduled delivery of equipment or a move in date that involves Staffing and set up.

The best way to avoid the Owner using up this Float is to ask the question prior to the Bid and establish who owns the float. In the absence of this, it may be of benefit to create an early completion clause in the Contracts, as well as establishing turn around and full response time limits of critical information durations for Submissions and Design related issues. In most contracts, this time line is referred to as a resonable amount of time - this verbiage says nothing as reasonable is in the eye of the beholder. I recommend putting firm durations on this in lieu of the word reasonable.

I have battled this numerous times and have only been successful in cases where there are gross errors or delays created by the Owner and even then, I was only given the time beyond the original Contractual completion duration established.

The only way a change in cost or time is usually allowed is through a change order after the contract is executed. If the contractor wants his ambitious schedule to be valid, execute a change order which will shorten the total amount of contract time. If liquidated damages apply on the project they would commence at that point instead of at the later original date. Fair is fair.


Float belongs to the Contractor unless otherwise specified.

Where Float is assigned to "the Project Benefit" only the required "Late Dates" on contract completion milestones have any legal standing.

Many contracts have "no damages for delay" clauses which makes it a mute point but for time extentions and liquidated damage avoidance when they exist.

Contractors who run two different schedules (Owner & Subcontractor) are asking for trouble if they get into a dispute with a smart subcontractor.

If Owner and Contractor agree to a shorter schedule then make it so by contract. "Avoid the Partnering Concept" It is fine when there are no disputes and always favors the Owner.

If you want to push the project then fill in the float with rear end punchlist, commissioning and weather allowance activity and use it as contingency.

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