Soil Conditions

[ALBin517]

We hired a contractor to do trenchless watermain installation and he drilled into some discarded construction materials that delayed him for about a week. The contract has clauses which essentially say, "Here are the logs for the soil borings that were done. No guarantee is made about what will be found anywhere else and we won't pay you more if there's something in there that we don't know about."

But he's asking to be compensated for his down time and claims that a contract that forces a contractor to assume complete liability for soil conditions is against state law. I am no lawyer but I asked him for a copy of the statute.

In the meantime, does anybody have any experience with this?

 

[EM_PS]

hmm, don't know about the State law thing (its possible), but yeah, since subterrain conditions are by & large WAG's (wild-ass guesses), there are usually allowances to allow a contractor to not totally have to eat it when they run into ancient catacombs (actually happened on a brownfield redevelop) or whatever debris. otherwise very likely would end up in court anyways, and not to mention said contractor would blackball your firm. Change orders & client approval always a good idea of course...

 

[MA_PE]

agreed that despite any contract language, I think this one would end up in court and some agreement will be reached.

It's both unfair and unreasonable for either side to take full responsibility for localized subsurface condtions like that.

IMHO, th decision would also be based on the amount of debris that was buried and whether the designer should have been resaonably aware that it may be present and whether that risk was conveyed to the contractor.

 

[ALBin517]

hmm, don't know about the State law thing (its possible), but yeah, since subterrain conditions are by & large WAG's (wild-ass guesses), there are usually allowances to allow a contractor to not totally have to eat it when they run into ancient catacombs (actually happened on a brownfield redevelop) or whatever debris. otherwise very likely would end up in court anyways, and not to mention said contractor would blackball your firm. Change orders & client approval always a good idea of course...

I appreciate your response.

They always expect more money when they hit something significant. But when they don't hit anything at all, they don't offer us a refund. :true:

Why is that?

 

[ALBin517]

agreed that despite any contract language, I think this one would end up in court and some agreement will be reached.
It's both unfair and unreasonable for either side to take full responsibility for localized subsurface condtions like that.

IMHO, the decision would also be based on the amount of debris that was buried and whether the designer should have been resaonably aware that it may be present and whether that risk was conveyed to the contractor.

They were about 15' under a railway and drilled into discarded railroad timbers. The railroad would not let us dig in their right of way until actual construction started and their inspector was onsite. So there was no way to do a pre-bid soil boring there. We did a soil boring 10' outside the RR right of way and it was clean.

 

[EM_PS]

there usually has to be some form of human sacrifice for anything to be done in RR r/w's anyways - how wide is the r/w?

 

[ALBin517]

there usually has to be some form of human sacrifice for anything to be done in RR r/w's anyways - how wide is the r/w?

Yeah, the railroad permit took about 10 months to secure. Then their inspector (whom we had to pay $125 per hour plus $250 per day to mobilize) let us work for about three hours before he shut us down. We were following all their specs and permit conditions but he “didn’t like the looks of the soils.”

Railroad right-of-way was 100 feet wide.

 

[IlPadrino]

The concept of who holds risk and how they account for it is interesting. The owner usually wants the contractor to hold all the risk (firm fixed price) and that's almost always a good thing. However, when the contractor recognizes unusual risk before he gives you his bid, he'll account for it and you'll be paying for it whether it comes to pass or not. In theory, all offerors make reasonable decisions in preparing their bids and the risks are accounted for responsibly. In practice, some contractors will low-ball their bid and argue changed conditions or unforeseens and make the owner pay for their irresponsible decision.

ALBin517 has it exactly right: many contractors want extra compensation when their risk becomes reality but don't offer any rebate when the risk doesn't come to pass. This is nothing more than shifting the risk to the owner and is counter to the concept of a FFP contract.

In my experience, whenever a risk is clearly called out in a FFP contract the owner does NOT pay if the risk becomes reality. This is why the contractor builds contingency or profit into the offer. I know nothing about your state or its laws, but I can't imagine why a state would get into how two parties can assign risk in a private contract - it's the foundation of capitalism!

My recommendation: Don't pay. It sounds like what he found was something he should have reasonably foreseen. Catacombs, not so much! Put the burden on the contractor to claim your decision. Hopefully your organization has dispute resolution procedures that could solve this before it ever goes to court. Because really, who's going to pay lawyers for a few days of extra labor and equipment?

MA_PE: You wrote

It's both unfair and unreasonable for either side to take full responsibility for localized subsurface condtions like that.

Why's that? If it's not one side or the other, how would it get resolved? In my experience, I've almost never seen the owner and contractor agree to split risk (before or after the risk becomes reality). When the risk is significant, the owner can enter into a cost plus contract and pay actual costs.

 

[MA_PE]

ALBin517 has it exactly right: many contractors want extra compensation when their risk becomes reality but don't offer any rebate when the risk doesn't come to pass. This is nothing more than shifting the risk to the owner and is counter to the concept of a FFP contract.

There is always a risk of unexpected subsurface conditions. IMHO, the risk needs to be reasonable. Potential rock, sand layers, other naturally occurring conditions. Man-made debris cannot be reasonably expected unless there is prior knowledge that the site is a land fill of has had some other use in the past. As someone said is you encounter catacombs. That's what arbitration is about, look at the specific circumstances and see if the contractor should have reasonably anticipated the circumstances in his FFP. If so, then no additional compensation. If practice says that typical practice would not have been to consider that risk in the price, then the contractor may be entitled to an extra.

In my experience, whenever a risk is clearly called out in a FFP contract the owner does NOT pay if the risk becomes reality. This is why the contractor builds contingency or profit into the offer. I know nothing about your state or its laws, but I can't imagine why a state would get into how two parties can assign risk in a private contract - it's the foundation of capitalism!

Again to use your words "risk is clearly called out in a FFP contract". Whether or not it was in fact clearly called out is specific to the contract and global phrases like "contractor is responsible for any unknown circumstances" does not necessarily hold up. IMO, The extent of the unknown circumstance must be a reasonable assumption for typical practice.

My recommendation: Don't pay. It sounds like what he found was something he should have reasonably foreseen. Catacombs, not so much! Put the burden on the contractor to claim your decision. Hopefully your organization has dispute resolution procedures that could solve this before it ever goes to court. Because really, who's going to pay lawyers for a few days of extra labor and equipment?

see we agree. You feel the contractor should have reasonably anticipated it. Depending on the specifics of this project, some people may not agree with that.

MA_PE: You wrote

It's both unfair and unreasonable for either side to take full responsibility for localized subsurface condtions like that.

Why's that? If it's not one side or the other, how would it get resolved? In my experience, I've almost never seen the owner and contractor agree to split risk (before or after the risk becomes reality). When the risk is significant, the owner can enter into a cost plus contract and pay actual costs.

you have never heard of a construction "settlement"? I guess I'd find that to be the owner and contractor agreeing to split the risk after the risk becomes reality.

Many times arbitrators will award partial claims, again this is "splitting the risk".

 

[IlPadrino]

Again to use your words "risk is clearly called out in a FFP contract". Whether or not it was in fact clearly called out is specific to the contract and global phrases like "contractor is responsible for any unknown circumstances" does not necessarily hold up. IMO, The extent of the unknown circumstance must be a reasonable assumption for typical practice.

Yeah... no argument from me there. But the OP said the contract read "Here are the logs for the soil borings that were done. No guarantee is made about what will be found anywhere else and we won't pay you more if there's something in there that we don't know about." I certainly agree it's unfair to say the Contractor is *always* responsible for unknown site conditions.

you have never heard of a construction "settlement"? I guess I'd find that to be the owner and contractor agreeing to split the risk after the risk becomes reality.
Many times arbitrators will award partial claims, again this is "splitting the risk".

Sure... but you wrote "It's both unfair and unreasonable for either side to take full responsibility for localized subsurface condtions like that." I know all about settlements - and they are almost always the result of both sides feeling like the other is responsible but neither side is willing to risk drawn-out claims that might eventually lead to a court case. I can count on one finger the number of times I've seen both sides willing to pay half because they felt the other side should pay something but not all.

 

[MA_PE]

sray:

you seemed to have left out the other relevant parts of my response:

"global phrases like "contractor is responsible for any unknown circumstances" do not necessarily hold up."

and

" You feel the contractor should have reasonably anticipated it. Depending on the specifics of this project, some people may not agree with that."

Based on what the OP has provided, I can see where the owner would resist paying an extra, but I also think the contractor may have a valid claim. This sounds like a lawsuit/arbitration case to me and as you already posted

Hopefully your organization has dispute resolution procedures that could solve this before it ever goes to court. Because really, who's going to pay lawyers for a few days of extra labor and equipment?

I think we're on the same page, I'm just not so quick to agree that the owner had this situation covered with the contract language.

 

[EnvEngineer]

We always do a geotechnical survey using GPR and metal detectors before we dig, I think the contractor should have done the diligence prior to digging, a few boring really gives you very little information about what you might encounter while digging.

There are two many contractors willing to enter into contracts with out doing the needed diligence, they hope everything works out.

 

[MA_PE]

We always do a geotechnical survey using GPR and metal detectors before we dig, I think the contractor should have done the diligence prior to digging, a few boring really gives you very little information about what you might encounter while digging.
There are two many contractors willing to enter into contracts with out doing the needed diligence, they hope everything works out.

Do you survey the full trench route before bidding? or before digging and after contract award?

 

[EnvEngineer]

Before digging after the contract award. Its tough since you have to get this cost into the proposal some how but its not alot, 1/2 day will do quite a bit and its $800. We typically can move around any problems or figure something out. If in this case where the trench would have to go right through the mess we would try and negociate something and hope the prime is resonable, or at least let us out of the contract. Typically the proposal language is incorporated in the contract and so we stick a clause in where we can modify the workplan following the geotechnical evaluation. Ususally they done read the proposal close enough to catch what we have inserted.

 

[Guest]

We hired a contractor to do trenchless watermain installation and he drilled into some discarded construction materials that delayed him for about a week. The contract has clauses which essentially say, "Here are the logs for the soil borings that were done. No guarantee is made about what will be found anywhere else and we won't pay you more if there's something in there that we don't know about."
But he's asking to be compensated for his down time and claims that a contract that forces a contractor to assume complete liability for soil conditions is against state law. I am no lawyer but I asked him for a copy of the statute.

In the meantime, does anybody have any experience with this?

I doubt that there is a statutory basis - sounds like smoke and mirrors to me.

As far as you ran into - I just recently had a project in the thumb of Michigan that turned out the same way. In this case, the unexpected condition were cobbles that were not detected in the site investigation. The cost of the construction project increased significantly since we were trenching and the cobbles presented a significant problem. The geotechnical investigation offered the same wiggle-worm type of language - end result was the company paid the contingency cost to get the job done.

I am curious about what one would consider as reasonable potential to show up in the soil conditions beneath a railroad line - my experience in Florida was that you would typically be dealing with discarded debris and contaiminated media. To be fair about it, I also worked on a lot of facilities where discarded waste was the norm.

Please offer some follow-up - interesting discussion.

JR

 

[Road Guy]

we have standard contract language that says if unidentified unsuitables are found the contractor gets $5/CY to make them dissapear, including repalcement fill up to the first 300 CY, then we negotiate an amount after that. this pertains only to when a bid item is not set up specifically.

typically what I like to do is always set aside a bid item for removing unsuitables and then if you use it you have it and if you dont then you dont have to pay it.

We also have a special provision any time we have to get a RR Permit that says something to the effect "Here are the RR requirments , you need to be familiar with XXX RR practices / policies and dont ask us for more money due to delays of dealing with the RR"