Contractor discovering unexpected subsurface condition....

Building Section Vignette and Multiple Choice

Contractor discovering unexpected subsurface condition....

Postby KenArquitech » Fri Sep 29, 2017 5:26 pm

HI - help on clarifying this would be greatly appreciated.

AIA A201 3.7.4 Concealed or Unknown Conditions says that a contractor is entitled for additional compensation if he notifies Architect & Owner within 21 days of observing an unexpected subsurface condition.

I was not happy with the question below from Ballast...

A developer from New York owns a large piece of property along the James River in Virginia and plan to construct a retirement community and golf course. This is an area where there are many pockets of unstable shrink/swell soil, so the architect advises the owner to hire a geotechnical engineer to conduct testing and prepare a soils report for the property. The developer bids construction of the club house and provides a copy of the soils report to each of the bidders along with the contract documents. The low bidder and the developer reach an agreement based upon AIA Document A201. Three weeks into the site excavation, the contractor finds areas of shrink/swell soil in locations not indicated in the soils report. Who is responsible for the cost of additional excavation and/or foundation design and reinforcement?

The answer is 'the contractor' - justification is that the contractor established that he/she is familiar with the site in the contract and owns that risk yet may be compensated later if he/she makes a claim.

Then Kaplan has a similar problem...

For the construction of a new office building, the owner has a budget of $1,000,000. The project is bid, and a contract is signed for $979,000. After the start of construction, unforeseen subsurface conditions are discovered, requiring a change order for an addition to the contract of $25,000. Which of the following statements is TRUE?

A. The owner will be required to pay $21,000 of the $25,000 and the architect the difference because the construction cost exceeds the budget by that amount.

B. The contract sum is increased by $25,000.

C. The owner should not agree to the change order, because the contractor bears the risk of unforeseen conditions on projects with a stipulated sum contract.

D. The architect must issue a change order to reduce the cost of some other aspect of the project by at least $25,000.

The answer is B. Explanation....

The contract sum must be increased by the total sum of all change orders. Unforeseen subsurface conditions that increase the contractor's cost generally result in an increase in the contract sum.

SO in conclusion Ballast does not assume that the contractor will be compensated and while Kaplan assumes the contractor will.

What is the correct way to think about who is liable for the cost of unforeseen subsurface conditions when you run into a question like this that tries to trick you?
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Re: Contractor discovering unexpected subsurface condition..

Postby ccolley12 » Mon Oct 02, 2017 11:46 am

Those are tricky.. and I think both are problematic insomuch as there isn't enough information to really know who is responsible. Typically, contracts do NOT transfer subsurface conditions risks to the contractor simply because it is almost impossible to quantify and thus a good contractor would put a huge premium on the cost to cover the unknown. So, again, practically speaking... the owner almost always carries this risk from a contractual standpoint. Even Structural Engineers will qualify their foundation designs saying it is based on the soils information provided by the owner...

Now, for these two questions. I think Kapplan's is more realistic, so I like that one better. But putting my test taking hat on and picking the best answer available; here are my explanations.

In the Ballast question, they specifically make mention of the soils report being given to each contractor. So to a degree, the contractor has some (not all) knowledge of the soil conditions. I suppose a very detailed soils report would have data at key locations relative to the foundation and so a contractor could/should reasonably assume some poor soils. Answer... contractor... (but I still hate that answer)

Kaplan: There is simply no information given other than a budget price, the initial contract value and the value of the 'unforeseen subsurface condition' Thus the best answer is to grant a change order for the 25K.

The Kaplan question is better only because it gives the right information to answer the question. Ballast gives too much information, but still not enough, so you are forced to extrapolate... which is unfair in a testing environment.

clear as mud?
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Re: Contractor discovering unexpected subsurface condition..

Postby KenArquitech » Mon Oct 02, 2017 11:54 am

Clear as mud! Thanks again for taking this on ccolley12 - huge help here. I hate the ballast question too, but I'm pretty familiar with A201 by now and I think you're right to assume the owner takes the responsibility having provided the information. Thanks!
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