Unforeseen Condition Delay 2

[Sojisub]

On the baseline schedule, the contractor put down 9 days drill and pull 1100 ft of pipe underground (horizontal directional pull). During the operation, they encountered rocks which slowed down their operation. The rocks were not on the geotechnical report so it is fair for the contractor to claim additional cost due to an unforeseen condition. However, they finished the pull in 7 days. Are they entitled to additional cost due to the unforeseen condition?

 

[SlideRuleEra]

Are they entitled to additional cost due to the unforeseen condition?

Yes, if the contractor can provide proof:

1) That he spent "additional" money to work with rock compared to bid conditions...

2) Possibly, minus the "value" of the two days gained. (Depending who, contractor or owner, benefits from acceleration of the work.)

This almost certainly be a judgement call and should be negotiated, but it is likely the contractor is due some additional cost.

http://www.SlideRuleEra.net

 

[cvg]

contractor pricing is based on:
labor + equipment + tools and supplies + materials + sub-contracted cost + general conditions/overhead + profit

it sounds like labor and equipment and overhead were probably less than estimated, so it may be hard to prove there were additional costs

 

[bimr]

What does your Contract say?

"You’ve contracted to install underground utilities. Once the work begins, you discover soils with inadequate bearing capacity, large amounts of unanticipated rock, groundwater at levels higher than anticipated, buried debris, or hazardous wastes. None of these conditions were expected. As a result, the cost you promised to the owner to install the utilities is no longer feasible. Who bears this risk?

A “differing site condition” (also known as a “changed condition”), which is abbreviated in this article as a “DSC,” is an unknown and hidden, concealed, or latent physical condition encountered at a site that differs materially from the reasonably anticipated conditions. Physical conditions are conditions you can actually touch, like soil, rock, and concrete; and not intangible, such as the availability and cost of labor, materials, and equipment.

Some contractors mistakenly believe they are always entitled to more time and money when they discover a DSC. They aren’t. Entitlement to more time and money for a DSC usually depends upon whether the applicable contract includes a differing site conditions clause.

Absent a differing site conditions clause, the doctrine of sanctity of contract[1] places the risk on the contractor if the work is more difficult, costly, or time-consuming than expected, unless due to the owner’s breach of contract, performance is rendered impossible by an Act of God, change in the applicable law, or the facts and circumstances support an equitable defense to this rule."

Link

Something like this should have been resolved prior to completion of the work. At what point during the work were the underground rocks discovered?

If different drilling equipment was required, then the Contractor incurred additional costs and should be reimbursed.

Contractors often proceed with extra work without first securing a written change order. If the contractor doesn't does not have a written change order or CCD, consider whether the parties may have waived the requirement through their words or actions.

 

[LittleInch]

Lump sum contract or in rates?

What does the contract say?

Let him out in a claim and see if it's valid as we don't know whether the were other costs other than more time.

Sounds a bit like a punt to me but we don't have all the information.

Most contract law will say you need to suffer a loss to claim but read the contract.

Remember - More details = better answers
Also: If you get a response it's polite to respond to it.

 

[1503-44]

The part missing from the story. Was the work completed in less time, because more labour or equipment was actually required by the situation and applied to the work? Length of time taken to complete the work is not necessarily indicative of the effort that it took to do it. EFFORT is the key word here. Did the contractor apply more effort as the result of dealing with this unknown situation, or not. If so, regardless of what the contract says, thats for the lawyers to decide, the contractor should be paid for extra effort applied. Are you the engineer, or the lawyer?

You should base your conclusion on what you believe is fair. Extra effort deserves consideration. Contractors finish jobs sooner than anticipated all the time. Is doing a great job and finishing faster a reason for not giving full payment? Is that what you tell your boss, " Sorry, I finished this before your deadline. I therefore do not expect to be paid for the time I saved."? Finishing early does not necessarily mean that you should reduce their payment, especially if you tangibaly benefitted directly from the work being completed sooner than expected. Example, Were you able to turn the water on two days earlier. Regardless of contract documents, courts have often awarded increased payments in those circumstances.

Unless you are the lawyer here, write your report according to what you saw. Extra effort or not. Fair is fair. Leave the contractual interpretations to the COO and the legal department sort out payment details. If you believe they expended extra effort because of the problem, say so. If you believe unknown rock did not affect the contractor's work effort, say so.

Statements above are the result of works performed solely by my AI providers.
I take no responsibility for any damages or injuries of any kind that may result.

 

[BigH]

Valid points above. However, I am not sure of the size of the contract or the details of the tender. The soils report didn't report "rocks" which I would take you mean boulders rather than bedrock. The geotechnical report surely should have identified bedrock if it were there. Most geo reports typically say that the conditions reported were encountered "at the boreholes locations only" and that the conditions between boreholes may differ. This in some ways is a weasel clause - but the geo report should also have indicated the general physiographic region which would have provided the general geological setting of the project and anticipated conditions.

Did the contract bidding process have a clause that stated that the Contractor has the right to carry out, during tender, its own investigation to confirm the conditions to its satisfaction? Did the tender have a period that allowed the contractors bidding the project to visit the site? Was the Contractor experienced in the area who, on other projects, should have known that boulders were present in the soil stratigraphy in which the pipe was being laid? (Of course, the geotechnical engineer should have known this too and noted that the general area is known to have boulders in the soil strata.) DId the contract have a BOQ item for oversize material (such as > 1 m3)? If so, was there an quantity item for it?

The above do play into the equation on changed conditions.

Whilst these thoughts may not apply for what is apparently a relatively small job, these are conditions that might apply to other projects. Projects on which I have worked overseas clearly give the Contractor the opportunity to visit the site and as an experienced contractor he would be aware of the possibility of such conditions.

 

[HTURKAK]

I will suggest you to look the details of contract.. Is this a lump sum contract ? Did the soil risk mentioned and how will be compensated?. One thing is clear that it is not fair for the contractor to claim additional cost due to time loss when the baseline schedul is 9 days and they finished in 7 days..

More over IMO , you may claim to keep the equipment rig at site for extra two days...

 

[1503-44]

HTURKAK That is not clear at all and ... you have not even seen the contract.

Statements above are the result of works performed solely by my AI providers.
I take no responsibility for any damages or injuries of any kind that may result.

 

[HTURKAK]

Could not see what is not clear... Read again my post and details provided by O.P.

If the base line schedule is mentioned 9 days in the contract document and and the job finished in 7 days, the contractor should not claim for time loss..

 

[Sojisub]

I want to add some information. They did not add any additional crew or equipment except they brought in an auger designed to drill for rock to ream the hole. There is a note on the drawing which states they have to perform "soil investigation". To me, that is very vague and don't think we can hold the contractor to find these along a stretch of 7000 ft.

Thanks for the response so far and any additional comments are appreciated.

 

[SwinnyGG]

they brought in an auger designed to drill for rock to ream the hole.

So they brought in additional equipment above what was originally slated for the job.

The way our contracts are structured, this would likely (but not certainly) be cause for the contractor to claim added costs, with exceptions - if they brought that equipment out to accelerate schedule of their own accord, they don't get to call me and ask for more money. If they were required to add equipment due to unforseen conditions and could not complete the work without doing so, then yes, time for that conversation.

This is, of course, what happens under our contracts. What happens under your contracts we don't know, and can't tell you.

 

[dik]

I had a case about a year ago where the contractor damaged his rig to the tune of about $60K. Claim was legit... the owner's geotech report stopped drilling at refusal to save some money... refusal in this case were moraine BFRs (big rocks). There was nothing in the geotech report that indicated any of this. You have to be careful that when you are working with contracts that you don't do anything unreasonable... this just leads to 'bad' contract law.

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[bimr]

It all goes back to the Contract. Does the Contract have a differing site conditions clause?

 

[Sojisub]

The Contract has a differing site condition clause.

 

[SwinnyGG]

The Contract has a differing site condition clause.

Then you have your answer. Read it until you understand it well (note... read what it says, don't read it until you get a favorable interpretation) and act accordingly.

 

[1503-44]

Then pay up.

Statements above are the result of works performed solely by my AI providers.
I take no responsibility for any damages or injuries of any kind that may result.

 

[cvg]

if they didn't perform the "soil investigation", than they are at least partially responsible, regardless of how vague the requirement is - they simply did nothing.

 

[1503-44]

Apparently client supplied the geotech.
"The rocks were not on the geotechnical report"

Statements above are the result of works performed solely by my AI providers.
I take no responsibility for any damages or injuries of any kind that may result.

 

[cvg]

it's my understanding that the contractor was to also do a soil investigation which would be a recommended risk reduction measure for this type of work