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Unforeseen Ground Condition - EOT Claims

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darryl khoo
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i am working on a project construction a sewerage treatment plant in malaysia. the project involves reclaiming oxidation ponds and constructing a modern sewerage treatment plant over it.

in my country, site investigation (si) reports are provided during the tender stage. however, in the contract documents, a clause is usually included whereby, the site investigation report is for information only, and does not constitute as part of the contract documents.

we have used this report to design the temporary works (sheetpiled cofferdam with jacked-in anchors for support). the system is used as the si report indicates that sandy silt material is below ground. however upon commencement of works, the support system failed. upon conducting further si at our own cost, it was discovered that the ground below was extremely soft clay.

now, we have two problems delaying the job.

i. delay due to excavation works in soft ground
ii. delay due to additional anchors required to support the sheetpiled wall

as a result of the si conducted by us, the consultant reinstated piling works for the structure here which they have omitted during the beginning of the project (piling was initially included in the tender drawings). this has also created additional delay (imagine piling using an iph machine on extremely soft clay).

we have tried to claim for extention of time due to unforeseen ground condition. the consultant argued that as an experienced builder, we should have foreseen that the location could have soft clay. furthermore, we were taking risk that the si report provided by them is accurate.

could you please provide any ideas on how to counter the consultants arguments. your comments are highly appreciated. (for your information, the contract used is fidic contract).

thank you.
darryl khoo

Replies

Mike Testro
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Hi John

Welcome to Planning Planet

Did you notice that this thread is 6 years old.

Its not good practice to respond to long dead threads - but we welcome your contribution to current topics.

Best regards

Mike Testro

John Anthony
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1) The disclaimer does not work. He has given you information which you have used to give him a lower price. Having obtained the lower price he cannot take it away. (I have told you but i did not say it)

2) It contradicts with the constarctor's responsibilities to examine etc, as far as "practical" given "time and cost" at the tender stage.

 

Bryan Russell
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Darryl,
I assume you are on FIDIC 4th ed by the reference to Sub-Clause 12.2 ; if so, a day is defined in Sub-Clause 1.1 g ii as a calendar day. Most Conditions of Contract have definitions near the front
Clive Randall
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Well done Daryll
EOT should say whether the extension was working or calendar days. It should also state the new contract completion date.
Its difficult to speculate on this one unless this info is provided or unless you got what you asked for.
Clive
Shahzad Munawar
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khoo :

The Extension of Time, you have granted is within your Contractual limitations not beyond thereof.

Ronald :

111 days of compensable overhead expenses depend upon what the Contract says in this respect that whether the said compensation is admissible under EOT Clause or not.
Ronald Winter
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I do hope that along with your contract extension, that you also received 111 days of compensable overhead expenses.
darryl khoo
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Hi everyone, i’m back again.

Thanks for all your advice. Got 124 days extension. 111 days for unforeseen soil and 13 days for extremely adverse weather.

I would like to pose a question. What is the normal practise to calculate the new completion date?

The original completion date was supposed to be 31st December 2005. If we just consider 124 days, that will bring the new completion date to 3rd May 2006.

The question is should the 124 days include Sundays and public holidays?

21 working days for Jan (5 sundays and 6 public holidays)
24 working days for Feb (4 sundays)
27 working days for Mar (4 sundays)
24 working days for Apr (5 sundays and 1 public holiday)
25 working days for May (4 sundays and 2 public holidays)
3 remaining days for Jun (1 sunday and 1 public holiday)

Total = 124 days

Does this mean that the actual completion date should be 5th June 2006 instead of 3rd May 2006?
Clive Randall
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Daryll
Would be interested to hear how this turns out
Kind regards
Clive
darryl khoo
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Thanks guys for all your valuable contributions. I believe I have a clearer picture on how to tackle the EOT claims.

Right now, I am preparing the document for submission

Regards

Darryl
Andrew Flowerdew
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Clive,

I agree with your thoughts and would fully expect the CRE to go to ground and dig his heels in - human nature I’m afraid. A certain amount of pressure has to brought to bear though and the contractors case proven in order for the CRE to be prepared to consider his position, or as you suggest find a way round it. The EoT is important to get as is the cost of any rework.

I’d still maintain the contractor giving him abit of a beating along the lines I’ve suggested and see what he does. The next tactical step, assuming he does as predicted and dives for cover, is to write him a letter that he can’t answer himself (or would be very foolish to attempt to) and therefore to force him to pass the issue on to someone who will gather all the information and come to an informed decision!
Stuart Ness
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Clive,

I think that Andrew is right in regard to the motives of the Engineer in hiding behind the disclaimer. I have experience of this in the past, where the Engineer’s company had also carried out a Site investigation that turned out be defective once the ground was excavated.

It takes time, but eventually the Engineer has to accept the inevitable!

I don’t agree that an ‘escape route’ has to be found, though I am fully aware of the cultural sensitivities in this regard from your neck of the woods!! ;-) Indeed, I have found in the past that the wording of the Conditions of Contract (in this case Sub-Clause 12.2) can be used as a face-saving device behind which the Engineer can hide. However, if he chooses not to use this camouflage, then I don’t think hat the Contractor is obliged to give him a fig leaf!!

I am not sure that a nod and a wink will work in this case; I would simply ask the Engineer where in the Contract it is stated that the Contractor is required to take on the responsibility and liability for the accuracy of the original Site Investigation! It is certainly not to be found in the Conditions of Contract (indeed, it states the opposite) and it is not included in the disclaimer!!

Cheers,

Stuart

www.rosmartin.com
Clive Randall
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Andrew
I hear what you say about the CRE, however I feel that if at all possible an escape route must be provided for him. On the face of the problem he has scr**ed up. Not unusual but the contract has been manipulated possibly badly to protect the Client. If the client feels he wants this protection and the engineer has written the contract all be it badly to provide it he will not act impartially. To so do would suggest that he admits his failure and we all know engineers never make mistakes especially CRE,s. So my advice was if at all possible to find a solution and in the meantime keep the evidence and get as much of it as you can, because under this set up the CRE will protect hard and arbitration may be the only solution.
As I said a nod and a wink may be the best outcome, and if you have an inclement weather clause this may prove beneficial for extensions etc.
Once again I understand your point Andrew.
Andrew Flowerdew
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Clive,

We are not going after the CRE, just trying to force him to make an independant, resonable and fair decision on the situation, as is his job to do so. He’s chosen to take the position of hiding behind the disclaimer for what ever reason - most likely he want’s to cover his companies position and or look good to the Employer. He therefore needs reminding of this duty to assess events impartialy taking in all circumstances which prevail. ie bottom line - I just want him to do his job properly.

Going for the tender SI company (which may be the same as the CRE’s company) is a long shot - no direct contract and I bet there’s a large disclaimer somewhere in the report. You would have to prove negligence and this is actually quite hard to do. Also, and most importantly, it’s not going to get the Contractor an EoT for the extra work.

If the CRE, and it’s his choice, the Contractor will only react to his actions, wishes to maintain his position then the thumb screws must be used on him. Sorry but that’s the way of the world.
Clive Randall
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Darryl
Good to hear the original design was approved I would suggest this is a valuable document.
I would make a note that the interview took place between the PE and RE get the PE to respond to a letter from you regarding what was said at that meeting. It may have occured some time ago but he may have handwritten notes etc if not he will have to recall from memory. If the RE has left and you know where he is a conversation or better still a written note from him regarding the meeting content would be usefull. The fact the RE quizzed your PE on parameters which could only have been obtained from the SI is important as is his approval based on the SI. It brings that document into the realm of a document used in the contract and undermines the argument that a skilled contractor blah blah blah.
When you value the piling you should consider a rate increase for greater depth due to heavier equipment more friction etc etc. Driving to set takes longer even if the length were the same you have to prove blow the pile. Also a longer pile may require to be made up of shorter pile sections requiring connection thus additional time and cost. Perhaps you will also need a service crane to assemble the lengths also extra cost. Dont use the same rate if the pile is longer seek to change the rate.
Due to the soft clay a thicker piling mat may be required im sure it will be otherwise you will lose the rig add that to the piling rate. If you can build the problem of time and cost into the piling rate it may be easier to accept.However note both the client and the CRE have fiddled with the contract to btry and make you responsible for ground conditions and they wont lay down quietly.
As for the sheet piles being in the excavation rate thats a problem and potentially a blessing. On the face of it the softer material may be easier to excavate so a reduction in part of the cost however the sheet pile rate increases due to the anchor changes, as he cant say what you allowed unless you gave him a breakdown you can manipulate the increase in your rate due to harder or different methods for excavating in very soft ground maybe even long reach excavators etc etc.
Notwithstanding this it would appear to me and I bow to Stuarts and Andrews experience here that you can sustain your claim for time and cost as there appears to be a de facto case that everybody post award relied on the original SI.
Stuart Andrew over to you
Clive
darryl khoo
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Clive

Thanks for your contribution. I am sorry that my earlier statement was unclear. I have mentioned that piling works was remeasured and paid for. The piling works refered to RC piling works, not sheetpiling. The sheetpile cost is not payable. The cost have been worked into the earthwork excavation cost.

We are responsible for the temporary designs which were subsequently submitted fully endorsed by a PE. There was approval of the first design. However, no reply was received for the redesign.

During the first design, the RE actually interviewed the designer as to the parameters used in the design. All parameters used were counter-checked against the original SI. However, this event is unrecorded and the RE has left the project for greener pastures. ;-)

Now for the unanswered questions.

Valuation of the piles were not done as the rates in the BOQ is per meter driven and not by number of points. Therefore, only remeasurement is required. However, we have not considered the additional difficulty and cost of piling 1.5m above formation level, excavating the overburden between the piles and cutting of piles, casting of the base slab before proceeding with the piling works again for the next section.

During tender stage, an estimate was derived based on sheetpiles required and methods of supporting the sheetpiles. However, no design was ever produced during then. At that moment of time, considerations were made that piling was required for the structures involved.

Hope that helps

Regards

Darryl

Clive Randall
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Andrew Stuart
I can see the points you are raising are extremly valid however the mindset here of the CRE is important. The last resort I feel is to back him into a contractual corner after all there is a longer term relationship to consider with both him and the client.
My idea of going after the person responsible for the SI was not founded on the contractors ability to chace a party he has no relationship with but of one that this may releive some pressure on the Engineer who himself based his design on the report. IE the short piles and then the removal of the piles.
As a matter of engineering L&M an contractor working in this area successfully use a system of cementitious ground improvement to stabalise the soils you are dealing with. It has been used very successfully in Singapore. This may be a face saver for all as it changes the design, produces I believe a cheaper alternatrive to piling to set and does not require the sheet piles at all. It also avoids disturbing too much ground which appears to be contaminated. Outside the contract issues under discussion but a possible face saver for all.
Turning back to the matter in hand I was interested to note that your sheet piles was remeasured item. (I have reread what you have written Daryl and this may not be the case) As such the fact that your tender design was not adequate should not matter. What appears to matter is that you went forward and excavated without carrying out your own SI and one assumes based your design on the Engineers SI. The fact that your point iii letter appears to instruct you during the contract to do this. From another angle was the design approved and if so by whom. The friction coefficient used was based I guess on the tender SI report. The CRE perhaps even an ICE signed off on this design and you proceeded on this basisi. Did you ask during the design period ie after award of contract for the SI report. Was it given to you formally by the CRE. There seems to be some grounds here if the design was based on a report subsequently issued after award of contract or a design which was approved by the Engineer after award based on the SI report.
Assuming the design was not approved and the report was not issued under the contract and you designed on some basis unknown. The sheet piles were installed at the design length and you were paid. Excavation commenced and the anchors and wall started to fail. Who stopped the work?? If the engineer stopped the work what did he say? Lets assume you stopped the work what did you say. The sky is falling in Mr CRE what do I do, or our design is wrong we will redesign after we have completed another SI assuming you were not instructed to carry out the SI.
So you carried out the SI and redesigned your work did you resubmit the design was it approved did you send the SI to the CRE was it approved? From your letters I, II, III it appears the CRE stood behind the original SI even though ground conditions were proving something different. He is therefore saying that you should and could rely on the SI. This to me brings the SI into the contract documentation. Stuarts and Andrews arguments then prevail on reliance and you prevail.
How do you get out of the hole with limited damage to all
Obviously you have to backfill remove the anchors and extract some piles and redrive. The removed piles are additional expense possibly not payable so are the anchors. the balance of the piles can be extended and should be paid for under the remeasure (if I understood you) as should the additional anchors. The commercial loss is therefore the extracted piles which hopefully can be reused and therfore the loss is the driving cost and the anchors. Yes
I know Stuart Andrew there is a time element.So add that on. Now dependent on the answers above this may be simply reimbursable. The redesign was due to the ground conditions, (by the way are you responsible for temporary work design very strange if it is remeasured) and therefore should be awardable the lengthening should be claimable if not why not. Perhaps because you accepted the site as was. as you are getting the time for the permanent piles maybe there is no delay as you can install the sheet piles at the same time, that solves an issue if it is possible. What about the permanent piles. I am assuming you have to install from original ground level.
So in conclusion there are a huge number of questions to (by the way the valuation or claim question I asked earlier has not been answered.) answer all of which have a bearing on the matter. I would reiterate before you go for the commercial jugular see if there is a way out. Look at the real delay. You may be able to recover a good proportion of your costs if the sheet piles are remeasured, look at the additional rate for lengthening the piles and swing some money in there if you can ditto the sheet piles and anchors, see what you can do with the extra time for the installation of the anchors etc. If you can try to work with the CRE he is in the doo doo and if a suitable lifeline can be found both of you could turn a disater into a success.
If all that fails maintain your contractual position and get some legal advice. Above all else keep scrupulous records of what you are doing and get them signed every days by the CRE for record purposes.
Having reread all the postings after writing most of this I feel the engineers insistance during the contract to use the SI from the tender is the key. Clearly he accepts it is correct and as such you can base your design on it. Seems to me and im just a planner that you have a good case. HOWEVER its Malaysia and a nod and a wink may be the best result
Clive
Im still thinking
Andrew Flowerdew
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Darryl,

One further point in slight disagreement with Stuart - the Engineer is going to argue (or is arguing) that it the contractors responsibility to:

"inspect and examine the Site and its surroundings and shall satisfy himself before submitting his Tender as to the nature of the ground and sub-soil,"

Therefore the answer you need is one to this arguement and Stuart may be correct in that the above statement is inconsistent with other terms or conditions, the other term or condition taking precedent.

However, there is also however a general legal rule that ’specific clauses take precedent over general clauses’ and so the arguement goes on. Also which clause, if any, is a "condition" and which is a "warranty" and just to confuse everyone, the UK courts now use another term - an "innoculate" term, which sits somewhere between a "condition" and a "warranty". Please also don’t get confused as "condition" used in this legal concept does not mean something contained in the "conditions of contract" document, but a term of significant importance to the contract irrespective of where it is to be found in the documents - one that goes to the "root of the contract" is often used to define a term or clause which is a "condition" as opposed to a term of clause which is a "warranty". Warranty being an obligation arising from the contract but not essential to it. "Conditions" take precedence over "warranties". And it doesn’t stop there..

Confused!!!!!!!!!!

Now you know why I suggest avoiding the contractual arguements if it’s possible to get the Engineer to see your way of thinking some other way. The contractural route offers no guarantee of success without considerable more thought.
Andrew Flowerdew
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Stuart,

I’m from a contracting background so I would like to agree but on occassions that "half-arsed attempt to block the Contractor’s due entitlement in a lower level priority backwater clause." has managed on the facts put in front of a judge to do just that.
Andrew Flowerdew
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Darryl,

Can’t fault Stuart in his thoughts. I would however try and keep it as simple as possible to start with and see how the Engineer reacts.

The road of contractual arguement is normally long and winding, (and if it goes to dispute resolution, expensive) so if you can get a result by other means then try that way first.

My hunch is you will actually end up arguing over contractual terms, (just the way it often goes especially if there’s alot of money involved) so keep Stuarts advise very much in mind and spend some time putting events in date order and thinking about thier possible significance, especially anything that could amount to an Engineers instruction.

Stuart Ness
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Andrew,

I accept that the principle argument of the CRE is that the Contractor is not entitled to rely on the soils info given at tender. However, I don’t accept that that is what drives the Contractor’s entitlement.

I believe that the Contractor’s entitlement is driven by Clause 12.2 of FIDIC, and that this is not diminished by a half-arsed attempt to block the Contractor’s due entitlement in a lower level priority backwater clause. True, it does mean another hurdle for Darryl to overcome, but in my view, it does not remove his entitlement. Nor does it impose the responsibility for the Site Investigation upon the Contractor. (Does ask me where that responsibility lies – probably covered in soft clay – but ’contra proferentem’ bells are ringing!!)

Hope you have a great weekend too. ;-)

Cheers,

Stuart
Stuart Ness
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Darryl,

Thanks for the added info, which – as Andrew correctly notes – does seem to paint you into a corner!! ;-(.

However, I think Andrew is right in seeing a chink of light in the third letter, and by the time you get to the end of this post, I hope there is a bit more light!!
If the third letter can be construed as an instruction to follow the contents of the Soil Report, in full or in part, then there may be some relief there. Also, at what point in the schedule was the notification of soft clay made?

The reference to the Site Investigation is contained in the General Section of the Specification, which I suggest is lower down the document priority list than the Conditions of Contract. The disclaimer to some degree appears to makes the original Site Investigation Report almost worthless in terms of its usefulness to the Contractor.

You therefore need to open up the discussion a bit:
Was it reasonable for the general site area to contain soft clay material?
Is the general area of the site prone to substantial areas of soft clay material?
Based on the topography of the ground, was it reasonable to anticipate the existence of soft clay material?
Is the Contractor a local contractor who, by virtue of his extensive local knowledge, should reasonably have expected there to be soft clay material?
Has soft clay material been prevalent in other deep foundations within the vicinity?

If the answers are: no, no, no, no and no, then I think that you may have passed the test as required by Sub-Clause 12.2 of FIDIC.

Let us look closely at the disclaimer.
In the disclaimer, the Employer does not guarantee the accuracy of the data in his Site Investigation; nor does he guarantee that the data is typical of the ground conditions to be encountered. By the same token, the disclaimer, in my view, does not require the Contractor to accept responsibility for the accuracy of the data in the Site Investigation; it merely confirms that the Employer does not accept the responsibility but that responsibility is not specifically imposed upon or accepted by the Contractor.

The disclaimer then goes on to confirm that the Contractor must do this, that and the other in regard to satisfying himself as to his completeness of Tender, which will already have been covered by Sub-Clause 12.1 of FIDIC.

The disclaimer then attempts to block the Contractor from claiming “…for additional expenses the Contractor may incur on account of any unforeseen obstacle of whatever nature, over and above those which would have been incurred had the existence of the obstacle been known at the Tender stage.” Here is where I can see Darryl’s panic setting in.

However, I suggest that this part of the Specification is in contradiction to and inconsistent with the wording of Clause 12.2 of the General Conditions of Contract, which (all things being equal!!) will have a higher priority, and under which he is entitled to EOT and additional costs if he “…encounters physical obstructions or physical conditions…which…were, in his opinion, not foreseeable by an experienced contractor…”

I also quote the note to Sub-Clause 12.2 in the Guide to the use of FIDIC (at Page 61):
Quote: “In spite of the pre-tender investigations of the Site by the parties, the Contractor may encounter unforeseen physical obstructions or physical conditions. Sub-Clause 12.2 lays down the procedure to be applied to such situations.”

***Darryl, note that the Note from FIDIC states: "In spite of the pre-tender investigations of the Site...." !!!
From this, I don’t believe that Darryl should be locked out of his entitlement to submit a claim (note that Clause 12.2 refers to “…in his opinion…” ) or have it succeed. We could start another thread about unfair contract terms, but it is already late on Friday afternoon!! ;-)


Darryl, you should concentrate on the words of Clause 12.2, in that you are an experienced Contractor which has encountered unforeseeable ground conditions (so unforeseeable that the Engineer didn’t even expect them!), and don’t cloud the issue with whether you have or have not taken on the responsibility for the accuracy of the Site Investigation (which in my view, you have not taken on!!)

In conclusion, I leave you with the weekend thought that the Contractor has not taken on the contractual responsibility for the accuracy of the data in the original Site Investigation, and that as an experienced contractor (assuming that to be the case, of course!!!!!), he could not have been expected to anticipate the existence of soft clay as ultimately discovered, confirmed by the fact, inter alia, that no such extent and nature of soft clay was discernible from a reasonable interpretation of the Site Investigation data.

Hope this helps rather than confuse!!

Cheers,

Stuart

www.rosmartin.com
Andrew Flowerdew
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Darryl,

It may not be that bleak, just trying to make the point that it is in some circumstances the Contractors choice whether he relies on the SI data at tender - often a point not appreciated by people. It’s often thought, the Engineer sent it as part of the tender so we can rely on it come what may - how wrong they are.

You don’t say whether your letters were pre or post contract agreement.

Letter (iii) appears to be a good one - if it can be shown that the Engineer instructed you to rely on the borehole information, you may have him where it hurts most! Ouch!!!

One thing I didn’t mention before is although this disclaimer exists, the contract has to be read as a whole. You also mentioned the clause was in the specification, not the conditions of contract. May or may not be of importance.

If it gets to the point of arguing contract conditions, read EVERYTHING and list ALL those clauses that may help your case AND ALL those that work against you. The most common mistake people make is jumping at one clause that helps them and hanging thier hat on that. You have to consider ALL the clauses, good or bad, and reconcile those that work against you before you can conclude whether your case is good or not.
darryl khoo
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Andrew and Stuart,

I know the situation sounds bleak. However, i do have several corespondence which might help

i. notification of the discovery of soft clay
ii. request whether additional site investigation is required as such soft clay may cause severe settlement of the structures
iii. reply from consultant "the site investigation has already been carried by ****. Please refer to borehole 5, 6, and 8 in the report".

We went ahead with the site investigation at our own cost (naturally!) and due to the report, the temporary works was redesigned to minimise movement of sheetpile (as method employed was not suitable) and the piles were eventually reinstated.

Regards

Darryl
Andrew Flowerdew
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Darryl,

That seems pretty clear to me -

The story goes something like this. Employer has a soils investigation carried out. Engineer sends report out with tenders as information available about the project. The soils report or tender documentation has a disclaimer in it saying it is only interpretive and can not be relied upon.

Contractor receives tender and soils report. The contractor reads soil report and disclaimer. (and if he missed the disclaimer it’s his fault) The contractor now has to decide to the extent he wishes to rely on the soils report. We all know in 99.9% of cases this will be 100% reliance but that’s the contractors choice and risk. What he should do is evaluate the report, decide if there are any critical areas (eg like where he is going to support his temp works) and seek further information if he thinks it needed - this may be from the Employer or by his own additional SI.

Now, if for example, access for further SI is not available and he can not obtain further information then he has a good case for saying he had to rely on the original soils report. Alternatively, if the soils report is unambiguous, eg there’s sand for 10m and the report could only be interpreted one way then if it turns out differently he has a good case for why he relied on the report. The contractor may also have expressly or impliedly indicated to the Engineer during the tender period that he has relied on the report or certain aspects of it and therefore the Engineer would most likely have to stand by this later as he had prior knowledge of the contractors intent.

Unfortunately you won’t find much about this in books as every case depends on it’s own individual facts.

I could pick holes in the clause such as it refers only to restricting (but not barring) claims for obstacles and therefore differing soil condition claims are unrestricted etc.

I would still suggest that your best option is to use the position talked about earlier before going down the route of arguing the legal niceties, although be prepared for this as that’s what it may come to.
darryl khoo
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This is the clause used for reference to the SI report in the General Specification

A soils investigation report is available as described in Section 02200. The report is indicative only of the conditions of various points within the Contract area. The Employer does not guarantee the accuracy of the data in the Report, nor does he guarantee it is typical of the ground conditions likely to be encountered. The Contractor shall inspect and examine the Site and its surroundings and shall satisfy himself before submitting his Tender as to the nature of the ground and sub-soil, the quantities and nature of the work and materials, tools and equipment necessary for the completion of the Works. No claim will be considered for additional expenses the Contractor may incur on account of any unforeseen obstacle of whatever nature, over and above those which would have been incurred had the existence of the obstacle been known at the Tender stage. Any excavations needed to determine the exact location, and levels, of obstacles shall be done by the Contractor. The Contractor shall obtain all further information required as to the risks, contingencies and other circumstances, which may influence or affect the execution of the Works and include the costs thereof in his Tender.
Andrew Flowerdew
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Stuart,

The principle arguement of the CRE is that the contractor is not entitled to rely on the soils info given at tender. If that is the case, the contractors claim fails, if the CRE is wrong, then the contractors claim stands.

I agree the contractor should put in a claim, but until the above point is decided, I wouldn’t hold my breath counting on the claim.

If the contractor is entitled then he can claim misrepresentation. Most soil reports I’ve come across have a disclaimer buried in them somewhere and therefore I’m not going to bet on the outcome of this without knowing more.

If the soils report was bound in the contract then it would be somewhat clearer but then I guess Darryl wouldn’t be having the problem he is.
Stuart Ness
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Andrew,

I used the word “probably” in reference to the likelihood of the Contractor being induced to rely upon the information. I stated categorically that he did rely upon the information (or at least that is my understanding from Darryl’s initial post).

In the absence of having seen anything to the contrary, such as reference to any particular exclusion of liability clause, I believe that the Contractor is entitled to recover his additional time and costs arising out of the defective SI Report.

Darryl originally posted his question not within the context of whether or not he was entitled to claim (indeed, his initial post confirms that he has already claimed), but he is looking for ways to counter the arguments of the (responsible??) CRE.

Cheers,

Stuart

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Andrew Flowerdew
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Stuart,

Your statement "is that the Contractor relied (and was probably induced to rely) upon the correctness of the contents of the SI Report." has one critical word in it - PROBABLY, and we don’t the answer to that.

If he was entitled to rely, then everything else flows from that. If he wasn’t, nothing flows from it and it fall down like a stack of cards.
Stuart Ness
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Darryl,

Make sure that you also include for the additional time of having to re-engineer the entire Temporary Works; it isn’t just a case of additional on-site time for longer piles, but you need to re-cycle your engineering work, probably starting from [before] square one.

You gain even less if your claim isn’t robust!! ;-)


Cheers,

Stuart

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Stuart Ness
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Darryl,

Thanks for the added info and clarification!

Andrew,

As Darryl pointed out in his original post, it doesn’t appear that the SI info was incorporated into the Contract documentation, but I think that is a moot point!! ;-)

What is more important, I suggest, is that the Contractor relied (and was probably induced to rely) upon the correctness of the contents of the SI Report.
Based on this reliance, the Contractor produced his Price and Schedule for carrying out the Works, including the time and cost of executing the subject Temporary Works.
During the progress of the Works, it later became evident that the SI information relied upon for the safe execution completion of the Temporary Works was defective.
Therefore, the Contractor should be entitled to claim for the additional costs and time incurred as a direct result of the defective SI Report.

I agree with you that the Contractor should go very hard against the CRE in this case; indeed I suspect that the CRE is bluffing and stalling for time! We don’t know if he is implicated in the defective information contained in the defective SI Report – I have been in situations before where the RE’s company screwed up the original SI Report and there was lots of eggs on faces!! ;-)

Cheers,

Stuart

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Andrew Flowerdew
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Darryl,

You gain nothing unless your claim is accepted.
Andrew Flowerdew
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Stuart,

I agree with what you say Stuart but as is often the case when the soils investigation or the interpretation of it is wrong, the first thing the CRE tries to hide behind is that they don’t warrant or guarantee the tender information to be correct. We all know the contractor relied upon it at tender and designed his temporary works accordingly. Was he entitled legally to rely on it is a different matter.

As the law stands (UK anyway) in general, is any representations made prior to the contract, if intended to be relied on and part of the contract, should be bound into the contract. Hence, soil reports, method statements, programmes, etc are not usually bound into the contract as if they are, they take on a completely different contractual meaning. To establish if the contractor could rely on the tender soils report and hence claim, you would have to have sight of all the tender correspondence associated with it and establish exactly what was said and done. Without that information you’re guessing. And what the law in Malaysia is might be completely different. Certainly in the Middle East, the contract is the contract and nothing said or done prior to the contract counts for anything. And come to that, was the contract made in Malaysia or elsewhere, we do not know. Who’s legal jurisdiction applies?

The actions of the CRE are pointers as to how he thinks - he certainly isn’t going to stand by his own work or information so be warned. Thats one of the reasons I would go in very hard at this point - so that he thinks twice about similar tactics in the future. Unfortunately sometimes it has to be done.

Clive,

This is purely a case of reliance (or not) on tender soils information not bound into the contract. The change in design may help prove your case but is irrelevant to the core problem.
darryl khoo
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Clive & Stuart,

Firstly, CRE stands for ’Chief Resident Engineer’. The project involves 5 sub-projects and each project is helmed by a Resident Engineer each.

The temporary works were designed based on the SI report with no provision for piling works to be done later. Excavation involved is approximately 8m deep and the SPT count is between 7 to 9 (Sandy). Upon completion of the additional SI, the SPT count was reduced to 0 - 3 (Soft Clay). Below the formation level of the structure, the SPT count was between 5 - 8 (Silty to Sandy) upto the depth of 21m. The new SI recorded 0 - 7 (Soft Clay).

Interestingly, i forgot to mention that the sheetpile actually failed on two counts. The anchor is selected due to friction between the anchor and sandy soil. Since soft clay is encountered, the anchor failed as no friction could be mobilized. The amount of anchors used doubled. A section of the sheetpiled wall actually tilted and moved horizontally thus requiring removal and repiling.

For your information, piling is remeasured and paid for.

Thanks for your help. I just realised that i have erred. Could actually gain approximately 2 months due to increase in pile depth. Just thought about it after reading through your contributions.

Regards

Darryl
Stuart Ness
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Clive,

The Contractor’s remedy will be against the Party with whom he is in Contract, the Client or Employer.
The CRE (Client’s or Consultant Resident Engineer – not sure which terms are used in this instance!!) is the representative of the Client or Employer. So the CRE isn’t the one being ‘got at’; the Contractor will ‘go after’ the Client/Employer, but he has to communicate through the Engineer, as set out in Clause 2 of FIDIC.

This situation appears to revolve around the Contractor having been given important sub-soil information upon which he designed and constructed his Temporary Works. That sub-soil information appears to have been given to the Contractor by the Client/Employer (or his Representatives), but the information turns out to have been defective, because it failed to identify soft clay that in fact was present.

As a direct result of the failure of the identification of the sub-soil clay, the Contractor has suffered from additional costs and loss of time.

The CRE – probably feeling both foolish and defensive – has said that the Contractor should have foreseen the existence of the clay that was hidden underneath and that was not identified in the sub-soil information. My view is that if it was foreseeable by the Contractor (which I doubt is the case) why was it not equally foreseeable by the CRE?

In addition, I hold to the view that the Contractor is fully entitled to depend upon the information related to the sub-soil that was given to him at the time of tender; the Contractor had no reason to question the veracity of the sub-soil information, and he is entitled to rely upon the reasonable expectation that the sub-soil information was correct.

Hope this helps,

Stuart

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Clive Randall
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Why go after the CRE
The person who did the original SI appears at the least to be negligent at the most fraudalant (SP).
I have seen this clause before and am interested in what you say Stewart.
Let me try to understand this from a different angle. You have a variation removing the piles originally?
Then you have a variation instructing them to be driven to set.
Have you valued either?
If not you need to think carefully how you do.
Your sheet piling was based on stable ground clearly this is now not the case as you have to pile to set, at the time of tender did you design your temp works in consideration that piles were required for the structure to carry the load via some softer material and therefore your sheet piles should also consider this soft material. Was this soft material shown on the SI or drawings. Im guessing it was. So your temp works were based on material that has proved softer than anticipated. If the piling has changed due to ground conditions then surely the temp works must change.
Having written that through I am sure the additional costs for piling must contain the additional costs for the excavation methods due to the changed ground.
I will sleep on this as I have seen a number of squirms on this subject.
Clive
Stuart Ness
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I would suggest that even if the SI Report was not incorporated into the Contract documentation, it still constitutes representation upon which the Contractor was entitled to rely, and use as a bona-fide basis for the design and construction of his Temporary Works.

In addition, the CRE now appears to consider that the Contractor should have foreseen that the location in question had soft clay. I would ask the CRE why, if this is the case, was it not equally foreseeable by the CRE? Many people forget that the construction process is a team, not an adversarial, process, so if it was foreseeable by the Contractor (which I don’t think it was!), then it must have been foreseeable by the CRE!

Hope this helps,

Stuart

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Andrew Flowerdew
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Darryl,

Back to the same old story - what did the contract have in it, not the tender. It is the contract agreement that is of importance.

If this does not have the piling in (which on what you say it didn’t) then I would argue that thier change in design from tender to contract only reinforced your interpretation as to the prevailing ground conditions.

I would further argue that in ignoring the design engineers interpretaion if it was correct, amounted to a breach of duty of reasonable skill and care to the Employer and mention you hope thier Professional Indemnity insurance policy is fully paid up when the Employer finds out.
darryl khoo
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Andrew

I was having the same thought.

i. In the tender drawing, piling was required. The criteria was pile to length of 9m.

ii. When the construction drawing was issued, the piling works were removed.

iii. Upon noticing the soft clay, the engineer reinstated piling. The criteria was changed to pile to set.

The CRE for the project has acknowledged that it was a mistake to remove the piling. However, his interpretation of the above events is, ’it indicates that the design engineers has interpreted the si report correctly and the reinstatement of the piling works reinforced that’.

He has informed that the reason for removal of the piling works was due to the engineers decision to reduce cost, thus replacing the pile with 600mm thick of crusher run or hardcore. We doubt that this is the case and suspect that he made up the story to support his interpretation... But that will be another story. ;p

Cheers

Darryl
Andrew Flowerdew
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Darryl,

If the SI info was not incorporated into the contract then it may (or may not) only constitute a representation made prior to the contract (even though wrong) and hence the Engineer may be correct. Alternatively Stuarts thoughts are correct.

There is alot of case law on this subject and depending on the exact circumstances, the courts have supported both sides of the arguement. A definative yes or no answer isn’t really possible without knowing more.

One general principle that may be of help is on the discovery of the actual ground conditions, did the Engineer revise the design due to the new information? If so then the ground conditions must have been unforeseeable otherwise a competent designer would have taken them into consideration and designed the works to suit. If the Engineer insists that it’s still unforeseeable then point out that you feel duty bound to tell your client that the Engineer has been potentially negligent in his design and that your client should claim the additional costs back from the Engineer. That often focuses the Engineers mind.

If no redesign was required then the Engineer has a pretty good arguement that the conditions were foreseeable and he took them into account in his design - even if he didn’t foresee them but how are you going to prove that!

I would try this first Darryl with regard the reintroduction of the piling etc and leave the reliance issue on tender information, if required, for later.
darryl khoo
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Thanks for your replies.

Is there any literature for reference where upon arbitration, the contractor is entitled to claims and extension of time due to unforeseen ground condition?

This will definitely help.

Thanks
Jihad Daniel
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Daryl,
This is a common problem where the Consultant states that as an experienced contractor, you should have studied, checked and examined the site conditions, etc. and the Contractor’s statement that he received in the tender stage S.I. report for information only and that these geological conditions were unforeseen and unpredicted...

I can tell you this: For many years, several forms of interpretive geotechnical reports have been incorporated into the Contract Documents for underground construction projects. It is now recommended that the Geotechnical Baseline Reports (GBR) be the interpretive report included in the Contract Documents. Its primary purpose is to establish a contractual statement of the geotechnical conditions anticipated to be encountered during underground and subsurface construction. This guideline and practice manual is intended to serve as a reference for preparers and users of GBR, and to inform owners of the importance of the contents of the GBR as related to the allocation of financial risk. In order to do this, it provides a checklist of items to consider when preparing the GBR, recommendations for the content and wording, and presents examples of problematic and improved practice in stating baselines. The question is: does this S.I. report provided to you for information, was detailed and gave sufficient/accurate information as it should be a real GBR?

The owner defines his expectations by a functional description of the project, a GBR on the basis of a
geotechnical database (GDB) that is as independent as possible from the construction method. Furthermore, he informs the bidders of the qualitative results of his risk analysis and on that basis defines the financial limit to which prospective bidders have to bear risk.The Maximum Bidders Responsibility (MBR) represents the financial limit from which it is the owner who will bear the costs caused by the geology. But below that, the contractor is responsible for his expectations to the geology, i.e., the competitive tender remains effective up to the MBR.

Therefore, this depends on the Clarification Meetings made in tender stage, type of contract (Lumpsum, BOT, etc.),risk analysis of your company and uplift/overhead put to account for geology factors, etc.

Also, when these unforeseen conditions occured, the Owner/Consultant/Contractor should surely agree on overcoming these conditions. Usually, the Contractor will be instructed to assign a third party to investigate the soil and propose an adequate system which will be approved by the Designer/Consultant before proceeding work. In this stage, the Contractor’s planner should revise the program of work, putting in his schedule these unforeseen site conditions, extra site reports needed in particular areas, adequate system agreed upon (boreholes, piling, nailing, etc.) and submit in a short time the revised schedule with the new completion date to the Consultant for his review and consent...

Cheers

Jihad Daniel

Stuart Ness
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Darryl,

You should keep in mind that the Contractor is entitled to rely upon the accuracy of any information that is provided to him as part of the tender (or related) documents, even though that information is not part of the Contract documents.

Therefore, if the Contractor has acted in all good faith and assuming that he has properly interpretated the Site Investigation data made available to him, then he should be in the clear. There is not an obligation on the Contractor to re-do the original SI nor verify it; nor should he be expected to assume that the original SI was defective (as it clearly was!)

Clause 12.2 of FIDIC allows an EOT claim where the Contractor encounters physical conditions that were not foreseeable by an experienced Contractor. In being supplied with a SI at the time of tender, which the Contractor was entitled to believe and upon which he was entitled to use as a basis for the design of his temporary works, the SI sets out the broad nature and extent of the foreseeable ground conditions.

If reality proves to be otherwise, then the original SI is clearly at fault, then the Contractor should be entitled to the additional costs and time that flow from the defective SI.

Under FIDIC (and most other Forms of Contract) the Contractor cannot be expected to assume the risk and responsibility for the correctness of a SI at tender stage (unless the Contract specifically enforces this obligation on him, and in such a case the Contractor must be given the opportunity to verify the original SI).

Your Consultant Engineer is not correct in his assertions Darryl, and you need to press your case. In addition, he is probably in the firing line if he or his Company is responsible for the defective SI.

Hope this helps,

Cheers,

Stuart

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