Float Ownership in Customized EPC Contracts

This is the fourth blog post in a series on float ownership. The first post addressed what float is, why it matters, main approaches to float ownership, practical considerations, common approaches in the U.S. and other countries, and recommendations. The second post discussed float ownership for lump-sum turnkey engineering, procurement, and construction (EPC) projects and offshore and mega-infrastructure projects, and the third post covered collaborative NEC projects and contractor-driven fast-track projects. Subsequent posts will address these topics:

EPC contracts typically take two basic forms. They are either customized, negotiated contracts or are based on the FIDIC Silver Book. This fourth post discusses typical float-related provisions in customized EPC contracts, and the fifth post will explore float-related provisions in Silver Book EPC contracts.

Subsequent posts will address these topics:

• Float ownership provisions in AIA contracts
• Float ownership provisions in the AGC/ConsensusDocs 200 – Standard Owner/Constructor Agreement (2023)
• Float ownership provisions in FIDIC Red Book 2017 contracts
• Float ownership under industry delay analysis standard practices

Float Ownership
Float is the amount of time by which an activity or project may be delayed without impacting the project completion time recorded in the then-current, approved schedule. Float ownership in customized EPC contracts is contractually determined and negotiated and has significant implications for extension-of-time (EOT) and delay claims. Courts generally enforce the express language on float ownership that the parties agreed to and interpret schedules accordingly. Explicit provisions reduce disputes, and aligning delay and EOT clauses with float clauses is critical. Good schedule management documentation supports enforcement of the parties’ intended rights.

Delay Entitlement
The following table sets forth typical delay assessment in customized EPC contracts.

Float Management Features
The next table sets forth typical schedule management and delay-related features of customized EPC contracts.

Typical Float Ownership
In EPC/turnkey contracts, the contractor assumes maximum responsibility for design, performance, schedule, completion, site, and coordination risks. Owner obligations may include providing land, permits, approvals, instructions, and more. The terms of customized EPC contracts are usually negotiated. Owner-friendly and contractor-friendly float ownership and usage positions in customized EPC contracts are set forth below.

Owner-Friendly
The project owns all float; therefore, float exclusively benefits neither the owner nor the contractor. Both parties may consume float on a first-come, first-served basis. The contractor is not entitled to an EOT unless the owner delays project completion after all float has been exhausted. The contractor typically cannot receive additional payment or EOTs solely because of float consumption or reduction. Regarding terminal float, any difference between the contractor’s planned completion date and the contractual deadline is typically a contractor risk and neither entitles the contractor to EOTs nor recovery of time-related costs. This strict approach to the contractual deadline helps prevent arguments based on planned early finish.

Contractor-Friendly
Float solely benefits the contractor. Any owner-caused delay that affects the contractor’s planned completion date entitles the contractor to an EOT, even if the delay does not affect the contractual deadline. If owner-caused delay consumes float, the contractor receives a corresponding EOT; the contractual deadline is adjusted to reinstate that float.

Total float and free float belong to the project, so both parties may use them on a first-come, first-served basis. Terminal float belongs exclusively to the contractor. The contractor is entitled to an EOT only to the extent that an owner-caused delay impacts the critical path and exceeds available total float. If concurrent delay affects the critical path, typically the contractor is entitled to an EOT but not additional payment for time-related costs, and the owner is not entitled to LDs.

If delays are sequential and not concurrent, entitlement is determined in chronological order of occurrence. Loss or consumption of float does not of itself constitute compensable delay. Float is determined solely by reference to the latest approved baseline or update schedule.

If the employer instructs acceleration to mitigate delay for which the contractor is entitled to an EOT, the contractor may recover demonstrable acceleration costs and reasonable profit on those costs. If the contractor accelerates voluntarily to mitigate its own delay, no additional payment is due. Acceleration occurs only if the owner fails to grant an EOT for an excusable delay and expressly or impliedly requires compliance with the original completion date.

Concurrent Delay
Concurrent delay generally refers to two or more independent delays (one caused by the owner, another by the contractor) that occur at the same time (or there is some degree of overlap in the delay time) and affect a project’s critical path and completion date. For example, a contractor completes design drawings late, and simultaneously, the owner delays site access. If both events affect completion, there is true concurrency.

Concurrent delay is one of the most complex and disputed topics in EPC contracts. It typically allows contractors EOTs, but they rarely recover prolongation costs unless concurrency can be segregated. Owners cannot recover LDs for periods attributable to their own delay. While many EPC contracts do not define concurrency expressly, this approach is common in practice.

Many EPC contracts do now include a clear clause on concurrency, such as, “If delay to completion is caused concurrently by Employer and Contractor events, the Contractor shall be entitled to an extension of time but not to payment of any additional costs.” If there is no such clause, governing law interpretation tends to decide outcomes (e.g., English, Australian, or international jurisprudence), or engineer’s or employer’s discretion under determination clauses.

Concurrency disputes often turn on factual delay evidence, not just legal principles. In concurrency cases, delay analysis is highly technical and requires critical path method (CPM) analysis and well-kept schedules. To manage concurrency, modern EPC agreements often include the following provisions:

1. Explicit concurrency clauses that codify time but not money
2. Detailed schedule procedures that require a baseline critical path schedule and monthly updates
3. Notice provisions for each delay event
4. Engineer’s determination clauses (as in FIDIC) or dispute board involvement
5. Clear float allocation to avoid ambiguity about schedule flexibility

The next blog post in this series will explore float ownership and concurrent delay in FIDIC Silver Book EPC contracts.

¹    See Henry Boot Construction (UK) Ltd. v. Malmaison Hotel (Manchester) Ltd. (1999), 70 Construction Law Reports 32.

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