Sunk by your own float

Do you know that, as of 19 October 1999, it became law that, in the event of a contractor being delayed, the bars on its programme chart can decide whether it is entitled to recover loss and or expense?

Alfred McAlpine does.¹ It contracted to erect a five-storey building. Practical completion was about 10 weeks late. Ascon was the subcontractor for the basement walls, columns and floors. It, too, was about 10 weeks late. McAlpine said, not surprisingly, that Ascon's failure to complete the structure in accordance with its subcontract delayed the works, and it knocked £163 000 off Ascon's payments in respect of McAlpine's prolongation costs.

Ascon was not a happy bunny. First, it said it was entitled to extensions of time that McAlpine hadn't granted. Second, it said that any liability that remained was subject to reduction if there was any float in McAlpine's main-contract programme.

At trial, Judge Hicks decided that Ascon was indeed entitled to an extension of time and held that it was responsible for only seven weeks and four days of the 10 weeks claimed by McAlpine.

Ascon then turned to the second limb of its defence. It claimed not only that McAlpine's main contract programme showed five weeks' float within what was otherwise the chain of its critical activities but also that Ascon was entitled to it.

It was not in dispute that McAlpine's programme contained a float of five weeks in the sense that had work started on time and had all sub-programmes been fulfilled without slippage, the main contract would have been completed five weeks early. McAlpine's argument was that it was entitled to the benefit of this float and that (in the words of the judgment) it "could use it at its option to 'cancel' or reduce delays for which it or its subcontractors were responsible". Judge Hicks rejected McAlpine's float argument, illustrating his decision with this example: "Six subcontractors, each responsible for a week's delay, will have caused no loss if there is a six weeks' float. They are equally at fault, and equally share in the benefit. If the float is only five weeks, so that completion is a week late, the same principle should operate; they are equally at fault, should equally share in the reduced benefit and therefore equally in responsibility for the one week's loss. The allocation should not be in the gift of the main contractor."

The judgment does not set out any grounds for the proposition that a main contractor has any obligation other than to complete by the agreed date; that is, there is no suggestion that any of McAlpine's programmes was a contract document. Nor does it set out any grounds for the proposition that the periods for the completion of other subcontractors' work should match the periods shown on any of its programmes.

Is it not the governing purpose of damages (or loss and/or expense) to put the party whose rights have been violated in the position it would have been in if its rights had been observed? If so, is it not the case that what the violated party's position would have been had its rights been observed is to be derived from an examination of what happened as a result of the breach? If that is so, what on earth did any programme produced by McAlpine before the breach have to do with what actually happened afterwards? Surely, it's the as-built chart, not a programme, that is relevant when determining causation?

From now, architects (and not just subcontractors) are going to be scouring main contractors' programmes for float when trying to decide whether a liability exists for the time-related costs incurred by a contractor when the employer has hindered or prevented it from completing to time.

1 Ascon Contracting vs Alfred McAlpine Construction Isle of Man (1997, ORB-361 & 1998, ORB-315)