Underground Uncertainties in Infrastructure Work

Editor’s Note: This is part two of an exclusive four-part series outlining the risks of modern underground utility infrastructure construction and rehabilitation work.

In Part 1, we introduced the concepts of underground uncertainties in infrastructure work. In this installment, we will look specifically at how contract language allocates the resolution of risks of underground uncertainties of existing conditions (geotechnical data, utilities, and Constituents of Concern) between the engineer, contractor and project owner.

A 1918 U.S. Supreme Court case (U.S. v. Spearin) said that when the government furnishes project plans and specifications, it has indicated that those documents are accurate and suitable for their intended use. This ruling has been expanded to include all project owners over the years. That means that the project owner pays the consequences for errors or omissions, or reasonable doubt and lack of clarity, in the documents, including underground conditions.

Therefore, a contract (between owner-engineer and owner-constructor) attempts to set forth the understanding of the parties as to how much investigation of existing conditions should be performed, how that investigation’s cost is compensated, and what procedures and relief should be expected when that investigation failed to adequately define the actual conditions that were found during construction.

One of the major contractual clauses that has evolved within the owner-constructor contract is known as a differing site condition (DSC) clause. There are two “types” of DSC clauses. Type I relates to subsurface or latent physical conditions differing materially from those indicated in the contract. Type II relates to unknown physical conditions, or of an unusual nature differing materially from those ordinarily encountered, and generally recognized as interfering in work of the character provided for in the contract.

A DSC is perhaps best summarized directly from case law language. “The purpose of the DSC clause is to take at least some of the gamble on subsurface conditions out of bidding. Bidders need not weigh the cost and ease of making their own borings against the risk of encountering an adverse subsurface, and they need not consider how large of a contingency should be added to the bid to cover the risk. They will have not windfalls or disasters. The government benefits from more accurate bidding, without inflation for risks which may not eventuate. It pays for difficult subsurface work only when it is encountered and was not indicated in the logs.” Foster Constr. C.A. & Williams Bros. Co. v. United States, 193 Ct. Cl. 587, 435 F.2d 873 (1970).

Issues immediately come to mind that have significant impacts on the success (as measured in budget and time) of the project. Who is going to be contracted and paid to do the subsurface investigations? Who is going to develop the scope of the investigations? What was the final investigation scope that was approved by the owner? How much uncertainty is remaining in the subsurface conditions after the scope was executed? How can that uncertainty be communicated?

The Engineers Joint Committee on Contract Documents (EJCDC), a joint venture of ASCE, ACEC and NSPE, along with participation from more than 20 other organizations, publishes sample contract language that is fair and balanced between all the parties for horizontal civil infrastructure development. The following paragraphs detail comprehensive EJCDC language on how the owner, engineer and contractor can contractually allocate the underground uncertainties
of conditions, utilities and
contaminants
.

EJCDC Language: differing subsurface or physical conditions

Notice by contractor
If contractor believes that any subsurface or physical condition that is uncovered or revealed at the site either: is of such a nature as to establish that any technical data on which contractor is entitled to rely as provided is materially inaccurate; or is of such a nature as to require a change in the drawings or specifications; or differs materially from that shown or indicated in the contract documents; or is of an unusual nature and differs materially from conditions ordinarily encountered and generally recognized as inherent in work of the character provided for in the contract documents; then contractor shall, promptly after becoming aware thereof and before further disturbing the subsurface or physical conditions or performing any work in connection therewith (except in an emergency), notify owner and engineer in writing about such condition. Contractor shall not further disturb such condition or perform any work in connection therewith (except with respect to an emergency) until receipt of a written statement permitting contractor to do so.

Engineer’s review
After receipt of written notice as required by the preceding paragraph, engineer will promptly review the subsurface or physical condition in question and:

  • Determine the necessity of the owner obtaining additional exploration or tests with respect to the condition.
  • Conclude whether the condition falls within any one or more of the differing site condition categories.
  • Obtain any pertinent cost or schedule information from contractor.
  • Prepare recommendations to owner regarding the contractor’s resumption of work in connection with the subsurface or physical condition in question and the need for any change in the drawings or specifications.
  • Advise owner in writing of engineer’s findings, conclusions and recommendations.

Owner’s statement to contractor regarding site condition
After receipt of engineer’s written findings, conclusions and recommendations, owner shall issue a written statement to contractor (with a copy to engineer) regarding the subsurface or physical condition in question, addressing the resumption of work in connection with such condition, indicating whether any change in the drawings or specifications will be made, and adopting or rejecting engineer’s written findings, conclusions and recommendations, in whole or in part.

Missing or incorrect underground facilities (utilities and other structures) information notice by contractor
If contractor believes that an underground facility that is uncovered or revealed at the site was not shown or indicated in the contract documents, or was not shown or indicated with reasonable accuracy, then contractor shall, promptly after becoming aware thereof and before further disturbing conditions affected thereby or performing any work in connection therewith, identify the owner of such underground facility and give written notice to that owner and to the engineer.

The engineer will promptly review the underground facility and conclude whether such underground facility was not shown or indicated in the contract documents, or was not shown or indicated with reasonable accuracy; obtain any pertinent cost or schedule information from contractor; prepare recommendations to owner regarding the contractor’s resumption of work in connection with the underground facility in question; determine the extent, if any, to which a change is required in the drawings or specifications to reflect and document the consequences of the existence or location of the underground facility; and advise owner in writing of engineer’s findings, conclusions, and recommendations. During such time, contractor shall be responsible for the safety and protection of such underground facility.

Owner’s statement to contractor regarding underground facility After receipt of engineer’s written findings, conclusions, and recommendations, owner shall issue a written statement to contractor (with a copy to engineer) regarding the underground facility in question and addressing the resumption of work.

Hazardous environmental condition issues
If contractor encounters, uncovers or reveals a hazardous environmental condition whose removal or remediation is not expressly identified in the contract documents as being within the scope of the work, or if contractor or anyone for whom contractor is responsible creates a hazardous environmental condition, then contractor shall immediately secure or otherwise isolate such condition, stop all work in connection with such condition and in any area affected thereby (except in an emergency), and notify owner and engineer (and promptly thereafter confirm such notice in writing). Owner shall promptly consult with engineer concerning the necessity for owner to retain a qualified expert to evaluate such condition or take corrective action, if any. Promptly after consulting with engineer, owner shall take such actions as are necessary to permit owner to timely obtain required permits and provide contractor the written notice. If contractor, or anyone for whom contractor is responsible, created the hazardous environmental condition in question, then owner may remove and remediate the hazardous environmental condition and impose a set-off against payments to account for the associated costs.

Contractor shall not resume work in connection with such hazardous environmental condition or in any affected area until after owner has obtained any required permits related thereto, and delivered written notice to contractor either specifying that such condition and any affected area is or has been rendered safe for the resumption of work, or specifying any special conditions under which such work may be resumed safely.

This language, or similar, will offer some protections to each party where uncertain conditions are encountered during construction. But these provisions do not provide any guidance on how to lessen the chance of encountering a DSC. In Parts 3 and 4 of this series, we will discuss how contracts can use a Geotechnical Base Line Report to quantify change orders, and how ASCE 38 can be used to reduce and manage the uncertainties of existing utilities.

About the Author:
Jim Anspach is technical practice lead for Cardno Inc.’s Utility Engineering and Survey Practice. He serves as ASCE’s Utility Engineering and Surveying Institute President for 2018. He is the incoming chair for EJCDC, and chairs the ASCE 38 Standard Committee. He is also a member of ASCE’s Board Committee on Claims Reduction and Management.

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