Does the Responsible Developer in her contracts delegate responsibility for the cost of removing unsuitable soils, boulders, junk, debris and unknown water sources and a host of other things that could be lurking under the site, that could impact project cost?
Of course, it can happen on any project, especially in the Puget Sound area.
There are almost no local tunnel, bridge, highway, or other infrastructure projects where the contract does not specifically address the risk of what are called "differing site conditions." A "differing site condition" is called that because it is a physical condition, that differs in type or amount, from what was expressly found or expected to exist under the site.
The risk allocation for differing site conditions is typically set forth in the RFP and prime contract and based on site borings, engineering, geotechnical and other investigative reports. The information about what is known is shared with bidders and the costs of dealing with certain conditions are addressed as a set cost per unit, to be billed to a contingency or allowance fund that typically will have a cap. If or when the contractor encounters these conditions he can make a claim against the allowance of contingency. If, however, the prime contract also limits the contractors' ability to tap other sources once these funds are exhausted, the contractor may be barred from further recovery.
Here are some samples of what bidders can expect to see in the RFP.
The Bidder declares that he/she has carefully examined the Contract Documents for the construction of the project, has personally inspected the site, is satisfied as to the quantities involved, including materials and equipment, and the conditions of work involved, including the fact that the description of the quantities of work and materials, as included herein, is brief and is intended only to indicate the general nature of the work and to identify the said quantities with the detailed requirements of the Contract Documents, and that this Proposal is made according to the provisions and under the terms of the Contract Documents, which Documents are hereby made a part of this Proposal.
Each Bidder must be aware of the conditions relating to the execution of the work, inspect the site and become thoroughly familiar with all the Contact Documents. Failure to do so will not relieve the successful Bidder of the obligation to enter into a Contract and complete the contemplated work in strict accordance with the Contract Documents. It shall be the Bidder’s obligation to verify all information concerning site and subsurface conditions.
Prior to bid opening, the Owner will make available to prospective Bidders any available information concerning subsurface conditions and surface topography at the worksite. Investigations conducted by the Engineer of subsurface conditions were made for the purpose of study and design, and neither the Owner nor the Engineer assumes any responsibility whatever in respect to the sufficiency or accuracy of borings, or of the logs of test borings, or of other investigations that have been made, or of the interpretations made thereof, and there is no warranty or guarantee, either expressed or implied, that the conditions indicated by such investigations are representative of those existing throughout such area, or any part thereof, or that unforeseen developments may not occur.
Logs of test borings, geotechnical reports, or topographic maps showing a record of the data obtained by the Engineer’s investigations of surface and subsurface conditions that are made available shall not be considered a part of the Contract Documents, said logs representing only the opinion of the Engineer as to the character of the materials encountered and are available only for the convenience of the Bidders.
After the bidder is awarded the work, the Responsible Developer mitigates against differing site conditions claims by incorporating terms into the contract that are called "Site Condition Warranties." These warranties are common in public projects. Here are some examples.
Site Condition Warranties
Contractor agrees, represents, and warrants, that it has examined and thoroughly familiarized itself with all existing conditions affecting the Work, including:
1. All laws, rules, and regulations applicable to, or affecting the Work;
2. All conditions impacting transportation, disposal, handling, and/or storage of materials, equipment and/or supplies,
3. The character of materials, equipment and/or supplies and facilities necessary in the scheduling and execution of the Work and providing facilities to maintain Owner's operations; and
4. All site conditions that would impact Contractor's ability to successfully complete the Work on budget, on time, and within the required parameters set forth in this Contract.
This provision attempts to secure against the unanticipated site conditions that might impact the project. The provision requires the contractor perform a minimal examination of the site to ensure that the site is adequate for the various activities at the site, including the site use, the delivery and storage of materials on site, the ability for multiple trades to work on the site, and the general suitability of the site of the purpose of the project.
Unless substantial site investigation, such as core drilling analysis, occurs, subsurface conditions are often an unknown for the contracting parties. The presence of different soil types, large rock formations or aquifers can dramatically increase the costs of construction as well as the cost associated with construction. The contract should address the subsurface conditions in order to minimize the risk that these conditions will impact the project.
Subsurface and Site Conditions Disclosed
Contractor has examined all available records and documents and has made a field examination of the site and has informed itself regarding surface and subsurface conditions, and surface and subsurface water conditions. All records or documents Owner possesses have been disclosed to Contractor. These records and documents were made with reasonable care and accuracy. Owner does not warrant or guarantee as to the accuracy of these records or documents or any interpretation or conclusions that may be drawn from such records or documents. Contractor acknowledges this and agrees it has formed its own opinion regarding surface and subsurface conditions and surface and subsurface water conditions. These records and documents are incorporated by reference to this Contract.
Impact of Differing Subsurface and Surface Conditions.
Should Contractor discover surface or subsurface conditions materially different from those anticipated by Owner and Contractor, and the differing surface or subsurface conditions prevent the successful completion of the Work under the terms of the Contract, Contractor shall notify shall notify Owner within 24 hours of discovery. The failure to notify Owner shall make the Contractor liable for any and all damages, including cost overruns, arising from such failures to act.
Use of Information
Information derived from inspection of logs of test borings, or pits, geotechnical reports, topographic maps, or from drawings showing location of utilities and structures will not in any way relieve the Contractor from any risk or from properly examining the site and making additional investigations, or from properly fulfilling all the terms of the contract documents.
Site Investigation and Representation
The Contractor acknowledges that he has satisfied himself as to the nature and location of the work, the general and local conditions, particularly those bearing upon availability of transportation, disposal, handling, and storage of materials, availability of labor, water, electric power, roads, and uncertainties of weather, stream or river stages, or similar physical conditions at the site, the conformation and conditions of the ground, the character of equipment and facilities needed preliminary to and during the prosecution of the work, and all other matters which can in any way affect the work or the cost thereof under this Contract.
Potential Legal Bar to Compensation
If the Contractor does find differing site conditions that are arguably compensable but beyond what the contract funds provided, there is another risk. If the Contractor's "notice of claim" is untimely and/or not in compliance with other contract provisions, the claim may be barred because Washington Courts have ruled that claim notice provisions must be strictly construed, even if the Owner was not prejudiced.
Currently there are several ongoing and future projects in the Pacific Northwest where differing site conditions are likely to arise, examples include the 520 Bridge, the Alaskan Way Viaduct and Bored Tunnel, the Sound Transit light rail expansion and the Columbia River Crossing. Given the history of our area, who knows what lurks beneath these sites.
Regardless, in the event a claim manifests itself, the Responsible Developer and Contractor need to know how to efficiently interpret what the contract will allow or bar. Doing so will reduce the cost of the claim and mitigate the cost of ADR or litigation. So if you are contemplating involvement in a major excavation, expect differing site conditions and just plan accordingly, which means plan for the worst. It's the responsible thing to do.