LESSONS LEARNED
FROM CONSTRUCTION CLAIMS AS THEY RELATE TO DIFFERING SITE CONDITIONS
DIFFERING SITE CONDITIONS
Perhaps the most commonly occurring set of
disruption and delay issues at construction sites comes under the heading of “differing site conditions” (DSC).
Things found by the contractor after
contract signing that are different than represented by the contract documents
are a “Type I Differing Site Condition”. Instead, the condition may fall under
the heading of a “Type II
Differing Site Condition”; conditions unusual in nature that
differ in a materially physical way from those normally encountered in similar
contracts.
Differing site
conditions in construction projects can cause schedule delays, cost increases,
and dangerous working conditions, or invalidate design assumptions.
Construction projects necessarily involve the assessment of site surface (and
subsurface) conditions to select the best means and methods to develop a
construction schedule and bid and to complete the project. For traditional
design-bid-build projects, the assessment of site conditions is typically based
on information provided by the owner/agency in the bid package, familiarity
gleaned from a site walk, as well as insight regarding conditions that could be
reasonably expected.
In some cases, contractors are encouraged to perform additional investigations, as needed, to become better acquainted with the field conditions. For design-build projects, the contractor typically accepts additional responsibility for evaluating site and subsurface conditions. Bidding contractors may be provided with a stipend to conduct additional subsurface investigations.
In some cases, contractors are encouraged to perform additional investigations, as needed, to become better acquainted with the field conditions. For design-build projects, the contractor typically accepts additional responsibility for evaluating site and subsurface conditions. Bidding contractors may be provided with a stipend to conduct additional subsurface investigations.
Based on our experience with the differing site
conditions claims, we provide below lessons learned from either the owner or
the contractor view. We hope that these
lessons will serve as a cornerstone for further reducing the construction
disputes between the parties or at least help in expediting the resolution of
these claims.
Lessons
Learned for Contractors
Prior to bidding on a project, the contractor should:
1.
Carefully review the
contract and understand how it assigns the risk of differing site conditions. Carefully read the contract and know what
limitations will be applied to the ability to make differing site conditions
claims or any other requests for change orders.
Either have prior experience performing the particular type of work and
contract – or hire managers that have requisite prior experience. Be prepared for Courts to enforce the
contract as written and not to reform the contract to be fair or reasonable.
2.
Search the contract for
onerous exculpatory clauses or contract language disclaiming the accuracy of site
information reflected in the bid documents.
3.
Perform a reasonable site
inspection and make a written and photographic record of your site
investigation. Notice the physical
characteristics of the surrounding property.
4.
If a differing site condition is encountered,
follow carefully the contract notice requirements and wait for instructions
from the owner before disturbing the site conditions.
5.
Keep careful and separate cost records of
your additional costs flowing from differing site conditions.
6. Understand that the law varies greatly, from state to state,
with respect to the allocation of site conditions risk. Before bidding work in
an unfamiliar jurisdiction, check with your construction lawyer.
7. When a bidding document identifies other subsurface
conditions reports and/or soil borings are “available upon request”, request
and review all such information and incorporate the knowledge gained into your
bid.
8. When reviewing bidding documents, do not assume that the
owner is required to provide all possible information available. Be prepared to perform and document some
independent investigation of conditions potentially impacting the project. If
other information is discovered, make certain that the bid cost reflects this independently
discovered information.
9. If the bidding documents are silent on an issue (for
example, groundwater) this is no guarantee that the condition does not exist. The contractor must perform his independent Investigation
from other sources and do test borings if this is warranted. The contractor must perform a reasonable
amount of independent investigation concerning subsurface conditions especially
where the bidding information is silent on matters that, logically, should be
present on or near the site. When the
contract information makes no specific representations as to conditions to be
encountered, contractors may not be successful in claiming that the condition encountered
“differed materially ” from the conditions anticipated.
10. If site conditions change subsequent to contract award, do
not rely upon the Differing Site Conditions clause for an equitable adjustment
to the cost or time of the contract. Look
to other equitable adjustment clause such as the Delay or the Changes clauses
instead.
11. When bidders are faced with a requirement to perform their
own independent, post award geotechnical investigation, they may not be able to
rely exclusively on the owner furnished subsurface information.
12. Contractors may have to retain the services of a local geotechnical
consultant to review the owner furnished information and provide advice on how
to interpret the data and prepare this portion of the bid. If this is done, it will need to be documented
in the event of a later differing site condition claim.
13. If the information provided by the owner in the contract
documents is included as a “guide” then the contractor may be at risk for
relying totally on this information. The
contractor must perform his own investigation of the conditions and cannot
later claim differing site conditions.
14. When other available information is noted in the bidding
documents bidders must take the time and make the effort to review this
information. Such a review may prove
helpful in bidding and planning the project. Further, such a review will help preserve the
contractor’s right to file a differing site condition on the basis of a
material difference between available information and actual conditions encountered.
15. Bidders must read the new contract anew. The contractors cannot assume that conditions
from previous contracts are the same as the conditions in the new contract
currently out for bid.
To avoid liability for unknown or unforeseen site conditions, the
owner should:
1.
Disclose all known conditions
prior to the submission of bids.
2.
If you include a
differing site conditions clause in the contract, impose strict notice
requirements and consider limiting the reimbursable costs to only direct job
site costs incurred by the contractor.
3.
Exculpatory clauses may
not avoid liability when the contract documents make positive representations
about the site or subsurface conditions. Avoid such representations within the contract
documents or otherwise.
4.
If there is a desire to
disclaim geotechnical information provided to bidders, be sure the contract
clearly states that the geotechnical reports are not part of the contract
documents.
5.
Prior to letting a
project, be certain that you understand how the contract allocates the risk of
unknown or differing site conditions.
6. To potentially avoid claims such as this, owners may want
to consider use of a Geotechnical Design Summary Report or a Geotechnical Baseline
Report where the geotechnical consultant interprets soil, rock and water conditions
between borings.
7. Make certain that the design professionals and geotechnical
consultants identify, search out and capture all subsurface conditions reports
and boring logs previously done on or near the site and incorporate an appropriate
notice of the availability of such additional information in the bidding
documents.
Metropolitan Engineering, Consulting & Forensics
(MECF)
Providing
Competent, Expert and Objective Investigative Engineering and Consulting
Services
P.O. Box
520
Tenafly,
NJ 07670-0520
Tel.:
(973) 897-8162
Fax:
(973) 810-0440
E-mail:
metroforensics@gmail.com
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pages: https://sites.google.com/site/metropolitanforensics/
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