Construction / 4 min read
During construction, contractors, particularly earthwork contractors and anyone specializing in underground construction, are susceptible to encountering a common issue known as differing site conditions. When encountering differing site conditions, a project can be brought to a halt and all types of questions can be raised about how to move forward and who is responsible for the costs, delays, and other issues caused by this differing site condition. If you are the contractor responsible for the work affected, you’ll want to make a differing site conditions claim.
What is a differing site conditions claim?
A differing site conditions claim arises when a contractor encounters subsurface or latent physical conditions at the project site that differ materially from those indicated in the contract documents or from conditions ordinarily encountered in similar work. These unexpected conditions can lead to increased costs and delays in project completion. There are two types of widely recognized differing site conditions. They are known as "Type I" and "Type II."
Type I conditions differ materially from those indicated in the contract documents, such as the geotechnical report, indicates should exist. The condition may or may not be one that is unusual for the type of project or geographic area. The key is that it differs from what the contract documents reflect.
Type II conditions are unknown physical conditions of an unusual nature that differ materially from those ordinarily encountered in similar work or a condition that differs materially from what one would reasonably expect. Normally, this means you’ve encountered either a condition abnormal for the geographic area or sometimes it means you’ve encountered some manmade feature that was not known at the time.
Whether you’ve encountered a Type I or Type II differing site condition, the effect can be the same. If you’ve identified the equipment you need for one type of site condition, but you find yourself working in a materially different condition, you may not be able to proceed with work despite having already invested significant time and resources into the job. Perhaps you can proceed, but you’ll incur more costs because you’ll need different equipment or more labor. For these reasons, you will likely need to make a claim for an adjustment to your contract.
How to Make a Differing Site Conditions Claim
In Texas, how you handle the differing site conditions claim is first governed by the contract. It is important to review your contract as soon as you encounter the differing site conditions to identify how to make your claim. There are six steps that are often required by the contract, and are best practices regardless of what the contract requires:
- Prompt Notification: As soon as you encounter a differing site condition, notify the owner or their representative in writing.
- Document the Conditions: Thoroughly document the unexpected conditions through photographs, videos, and detailed written descriptions. Compare these to the conditions described in the contract documents.
- Maintain Detailed Records: Keep accurate records of all additional costs incurred due to the differing conditions, including labor, equipment, and materials.
- Follow Contract Procedures: Adhere to any specific claim procedures outlined in your contract. Most contracts require formal notice within a specific timeframe.
- Seek Expert Opinion: Consider obtaining an expert's analysis to support your claim, especially for complex geological or engineering issues.
- Seek Legal Assistance: Consider consulting with an attorney to help you to interpret and comply with your contractual obligations.
Communication and documentation are critical. You want to make sure you communicate with the rest of the ownership, construction, and design team regarding the differing site conditions. In addition to documenting the conditions, you’ll want to document your communications. If you have an oral communication about the condition, follow up with an email summarizing the discussion and what the next steps will be.
Make sure you comply with the contract’s notice requirements. If the contract requires providing notice to a specific person (and it probably does), make sure that person gets the notification in the form required by your contract in the proper amount of time. If you miss a contractual notice deadline, act as quickly as possible to comply with your contract’s notice requirements.
Other Considerations
Some contracts purport to put all the risk of differing site conditions onto the contractor. The best practice is to refuse to enter into a contract with such a provision in the first place. If, however, you find yourself with a differing site condition and a contract that claims you are responsible for that condition, you may still have options for relief under your contract or other legal principles.
If you have a differing site conditions claim, it is important to act fast and consider hiring an attorney early in the process to navigate the legal and practical issues that will likely arise.