Total Damages Quantification Method for Float Allocation

A Master of Science thesis in Civil Engineering by Khaled M. S. Jadallah entitled, "Total Damages Quantification Method for Float Allocation," submitted in July 2016. Thesis advisor is Dr. Sameh Monir El-Sayegh. Soft and hard copy available.

Abstract

Construction projects involve several contracting parties such as clients, contractors, consultants and many others. These contracting parties tend to use the float of noncritical activities for their own benefits, such as the incorporation of change orders and for resource management purposes. Float ownership is one of the most debatable issues in the construction industry. In fact, using float by one party might yield in damages caused to the other party, such as increasing the risk towards finishing the project, disturbance of resource histogram and losses in the time value of money. This Thesis proposes a new method that can fairly allocate float ownership between all the project parties by considering all the damages that might occur when float is used. The total damages quantification method for float allocation aims to allocate float ownership for each party prior to signing the contract and specifies their liability towards using the float during the project execution. The float allocation process is performed using the total damages model that determines the optimum project schedule, with the lowest cost, considering the additional costs related to changes from that schedule due to the time value of money, resource leveling, and the increase of risk of delaying the project completion. Thus, contractors can set up their bid price based on the baseline schedule requirements and the liability of using float. Consumption of additional float can be quantified as damages using the total damages quantification model. Hence, float ownership for each party can be defined in the contract baseline schedule. Subsequently, unless all parties are committed to the baseline schedule, damages should be quantified as monetary values and the affected party should be compensated. As a result, by introducing this method, the contracting system clarifies all parties' rights and liabilities towards floats of non-critical activities, which in turn minimizes conflicts and claims that might end up by terminating projects and raising cases in courts of law. A case study is conducted in this research in order to show how each party of the construction project can suffer from damages due to the use of float, and how the Total Damages Method can be used in order to claim these damages.