Publication Abstract

Proceedings of the 39th Annual Conference on Deep Foundations, 2014, Atlanta, GA, USA, (DFI)

The Impact Geotechnical Data Management Systems May Have on Risk Allocation for Differing Site Conditions in Construction Contracts
Zachary D. Jones and Steven M. Henderson, P.E., Stites & Harbison, PLLC

The risk of allocation in construction contracts is a primary concern for all parties. For contracts involving subsurface construction the allocation of site condition risk is critical. In the past one hundred years technological advances fundamentally changed how that risk is allocated; yet another shift in this risk allocation may lie just over the horizon due to advances in geotechnical data management. Around the world initiatives are underway to make geotechnical datasets more open and accessible. In the United States some states like Kentucky have already made geotechnical data readily accessible. This proliferation of geotechnical data in the U.S. may impact the allocation of subsurface risk in construction contracts. Many construction contracts contain a differing site condition clause. That clause allows for a modification of the contract price or schedule if the ground conditions encountered by the contractor differ materially from either what was indicated in the contract documents or would be reasonably expected. A contractor, however, is typically not entitled to that modification if the contractor knew or should have known of the adverse conditions encountered. Courts have interpreted the “should have known” language as requiring contractors to make a reasonable site investigation prior to bidding the project. If geotechnical data is available and accessible and reveals the adverse condition the contractor encounters, courts could find that the contractor should have known of the condition and thus will not be entitled to a modification based on the differing site condition clause. Accordingly, the U.S. could be on the threshold of significant shifts in how the risk of differing site conditions is allocated in construction contracts.

 article #1991; publication #1011 (AM-2014)