Who 'owns' terminal float under an NEC contract?

Who 'owns' terminal float under an NEC contract?

• Contractor
• Client
• Project Manager
• Project

In my recent poll I posed a question about the ownership of terminal float and the majority of those who responded correctly identified that under the NEC form of contract terminal float is owned by the Contractor.

There are different types of float, and terminal float refers to a situation where a Contractor's planned date for completion is earlier than the date by which they are obliged to complete under the contract. The NEC form of contract is the only commonly used standard form which addresses the sometimes-thorny issue of who 'owns' that type of float.

It does this under the NEC 3 ECC form by providing at Clause 63.3 that "[a] delay to the Completion Date is assessed as the length of time that, due to the compensation event, planned Completion is later than planned Completion as shown on the Accepted Programme." Similar wording is found under the NEC 4 ECC form of contract at Clause 63.5, which provides that "[a] delay to the Completion Date is assessed as the length of time that, due to the compensation event, planned Completion is later than planned Completion as shown on the Accepted Programme at the dividing date."

In circumstances where planned Completion is shown as occurring earlier than the Completion Date on the Accepted Programme there would be a period of so-called terminal float. That float is then owned by the Contractor as under NEC delay is assessed by reference to the planned Completion, not the Completion Date. The terminal float is preserved for the benefit of the Contractor and is not something which can be used to mitigate the effect of a Compensation Event.

It follows that care needs to be taken by both Contractors in preparing and Project Managers in accepting the programme under NEC. If a Contractor intends to make provision for terminal float, then that must be shown on the programme it prepares. Equally, a Project Manager will want to understand if the programme which they are to accept includes an allowance for terminal float as that will be relevant in the assessment of any Compensation Events.