ConstructionPro Week, Volume: 2 - Issue: 10 - 03/08/2013

Are Owners Working at Cross Purposes with Site Data?

By Bruce Jervis

A federal construction project in Alaska has provided another example of owners trying to have it both ways with site condition information. During bid preparation, the site was buried in snow. The government provided logs from eight soil test borings. Actual subsurface conditions proved to be very different from the indications in the logs. The government then attempted to rely on general cautionary comments and descriptive terms it had included in the contract documents.

Project owners are working at cross purposes when it comes to site data. They provide specific information to reduce price contingencies and encourage tight bidding. Yet, fearing the liability that might result, they seek to limit or disclaim the significance of that information.

On the Alaska project, the owner’s tactic was unsuccessful. It was ruled that broad exculpatory language does not negate specific information -- such as soil boring logs -- provided to bidders with the expectation the information will be relied upon.

Where does this leave contractors? Can broad disclaimers be ignored with impunity? The best practice is a thorough independent investigation of the site. But sometimes, as on the Alaska project, this is not feasible. Bidders may be forced to rely on site information furnished by the owner notwithstanding the owner’s attempt to disclaim responsibility for the accuracy of that information. I welcome your comments.

COMMENTS

I used to work for a Geotech engineering firm in the field on many projects. Each state, in a court of law, view Test Borings and Test Pits differently. In PA, for instance, test borings will not hold up in a court of law. On a hotel project in Philadelphia, there were "traces of brick" and a few test pits excavated, but none along the new foundation line. When those lines were excavated an old ferry slip (75 years before the Ben Franklin Bridge) was discovered and the Owner (Growth Properties) thought about taking lega action--against my Geotech engineering firm, but could not. The trace of brick was from a well at the site; the ferry slip plans was eventually found in the archives of the Philadelphia Free Library. So the question becomes, what are the laws governing test borings in Alaska? Had we been on the other side of the river with that ferry slip in Camden NJ, the owner might have taken the geotech firm to court.
Posted by: James Grundvig - Friday, March 8, 2013 11:25 AM

Exculpatory language is common to all contracts, however what if additional clauses requires contractors to confirm the data by conducting its own investigation and always to conduct a site visit.

Prior to tender closing contractors will argue there was not reasonable time to review or conduct a separate investigation, let alone the cost of the later when dealing with subsurface conditions. However where the ground is not covered in snow such as the Alaska situation, it may be possible to reasonable deduce subsurface conditions may not be as reported by borehole logs. Argumentative to say the least and of course all locations give different information.

If there was reasonable time, then change site condition claims would appear to be more difficult for the contractor to put forward. However will most likely in the hope of reaching a settlement to arrive at something rather then nothing.

If tenders also requires contractors to conduct their investigation as part of their bid after awarding, then additional costs are most likely expected on discovery of changes and helps to mitigate other claims typically involving delay. However if the contractor elects to not conduct a thorough investigation (he relied on the owner’s documents based on common practice and knowledge), then is he still responsible later for found changes?

A thorough independent investigation by the owner prior to tender should always be done, but there is no such thing as a thorough investigation mainly due to cost but also practicality. Should they have conducted just one more borehole will also be raised. There are risks to the contractor and to the owner. Just how much risk should the contractor put into his bid, perhaps we should ask in the tender documents declarations what contingency value did the contractor put into his bid.

Topic has many possibilities and is a difficult one for all owners and contractors.

Posted by: John Sek - Friday, March 8, 2013 11:50 AM

Joe: What do you think about this for a topic of discussion? Bill
Posted by: Joe Greenier - Friday, March 8, 2013 11:58 AM

Bruce:

What do you think about this for a discussion topic? Bill
Posted by: Bruce Bockstael - Friday, March 8, 2013 11:59 AM

For your information.
Posted by: Bill Cianci - Friday, March 8, 2013 12:00 PM

Undersurface conditions that are unseen can be tricky. Judges will generally rule that the expert (contractor) in his field of expertise should know better and the owner is relying (paying) for that knowledge. All the boilerplate in the world can't make a job go smothly. Let's say a contractor digs into the ground for underground(14 Ft. inverse) CHW 12 inch diameter pipe connections to a college campus CHW loop new building connection. Everything is going great, then it rains for a week. The work proceeds, but then at 13 feet below grade the electical bank adjacent to the CHW loop is slightly breached by the track hoe and since the connection is located at the low end of the campus we now have a river of water from the electrical bank gravel underlayment flowing water into the 30 foot diameter 14 ft invert trench boxed pit. Who's fault is it for the $60K dewatering fees and loss in schedule? The contractor was unex[ectedly forced into the ground by the owner's CM due to "college vacation schedule. How doe sthis play out to recoup any loss to the bottom line for the contractor? He's the expert afterall, right?
Posted by: Tom Nervina - Monday, March 11, 2013 8:28 AM