Groundworks, Archaeology and Minimising Risk in Procurement

If you’re a Developer and you intend to proceed on a construction management basis then you’ll be procuring individual packages of works including groundworks and archaeology. Understanding the risk of excavating in the ground, what you can do to mitigate it, your own risk profile, and how to pass risk to the supply chain is important if you expect to receive appropriate tender returns.

From the perspective of the groundworks contractor, having received an invitation to tender with no site or ground investigation information, you may consider it too bigger risk to return a quotation at this stage. This is because you’re entirely unsighted on the nature and makeup of the ground and therefore how are you expected to price realistic outputs? You may return a price but it will be heavily qualified around the expected ground conditions, which pushes risk back onto the client. The client will be reluctant to proceed on this basis as they are seeking price certainty.

As a matter of good practice, and in some cases even as a legal obligation, a ground investigation of the site is provided by the client as a GIR or Ground Investigation Report to identify any previous use, stability of the ground and potential problems in providing the works. By providing a GIR and demonstrating how the findings of this have been reflected in the design, your enquiry will encourage contractors that you have properly considered the existing conditions and they can return a price reflective of this.

How do you manage the risk of the unknown in the ground?

If for example you provided a design and then, if the ground conditions are found to be different than expected, you require a redesign of the foundations, this would constitute a clear variation and you would have to pay for this. Alternatively, if you procured the works on a design and build basis, including as a developer providing a ground investigation report, then you are passing the risk of sufficient foundation design to your suppliers.

However, for issues that arise with ground conditions such as unexpected hard dig or unforeseen obstructions, the balance of risk is less clear. For example, if hard dig is encountered by your contractor and this results in a need for them to alter their working method (e.g. different equipment or more resource) they will need to make the case for why they consider this to be a variation and therefore why they are entitled to be paid the associated cost and delay.

This may not be easy if they returned a price based solely on the client’s enquiry which did not contain any information as to the current ground conditions. By default, they will be deemed to have allowed for whatever is required to meet their contractual obligations irrespective of the actual conditions they find once the works start. Whilst this level of risk transfer may sound appealing to the client, in reality, they are likely to receive limited tender returns from their supply chain or worst case no one prices the works at all.

If you consider the various forms of contract on offer, how do they manage the risk of unknown ground conditions? NEC ECC refers to:

“…physical conditions which an experienced contractor would have judged at the Contract Date to have such a small chance of occurring that it would have been unreasonable for him to have allowed for them”

But how would a contractor back this argument up in the absence of any pre-existing information supplied by the client who could then claim they must have allowed for all eventualities.

ICE Conditions states:

“… the Contractor encounters physical conditions or artificial obstructions which conditions or obstructions could not in his opinion reasonably have been foreseen by an experienced Contractor.”

The above is arguably even more onerous than NEC ECC as entitlement is triggered by the words opinion and then the words experienced contractor making a case difficult to prove.

Whilst the above contracts are largely used for civil engineering works and hence, they contain clauses that allow contractors to make claims against ground conditions, there is no such clause replicated in the JCT suite of contracts. Therefore, if you are a groundworks contractor pricing an enquiry on JCT terms, you should be aware that you will deemed to have allowed for the risk of unexpected ground conditions and that if encountered you will not be entitled to additional time or money.

Is it essential to get a ground report?

It all depends on the type of development you are considering i.e. do you have information as to the development site’s previous use to such a point that you consider there is enough information to inform a design. Or, you may proceed with a design and build contractor who is then obligated to provide the full detailed design that will be informed by their own site or ground investigation.

If you intend to proceed on a ’self-build’ basis, providing your own design, you need to know that your design is buildable. To do so, you need to carry out site investigation works.
These investigation works are typically broken down into four sections:

• Phase 1 – Desk top study
• Phase 2 – Intrusive Survey/Investigation
• Phase 3 – Remediation Strategy
• Phase 4 – Validation

Linking back to the above, if you go down the full design and build route, you may only need to provide Phase 1, whereas the self-build route is likely to be Phase 2 at a minimum.

Building design should take account of the nature of the ground to avoid scenarios such as collapse or damage to adjacent buildings. Notwithstanding this it should also allow for investigation into the presence of harmful or dangerous substances. Ground investigation reports themselves are carried out under BS EN 1997-2 with this document setting out how to plan and then report on ground investigation.

Depending on how you intend to procure the works, this will likely affect which phase of investigation you advance too before handing over to works contractors. It’s good practice to provide as a minimum a desk top study of any pre-existing information.

Are there common risks that I should look out for, and in turn common solutions?

The risks, in terms of procurement, are that lack of suitable information means that tendering contractors for groundworks packages are likely to either price a high level of risk into their price that reflects the unknown ground conditions or qualify their prices out and pass this risk back to the client. The best way to avoid this is to carry out and provide a desk top study and GIR that demonstrates the build up to your design assumptions or better still provide your own site investigation reports.

However, when carrying out intrusive survey works to inform your GIR there are many incidences where clients will scope out their requirements but, due to cost constraints, then scale this back. For example, ground investigation reports should consider issues such as:

• Subsidence e.g. from collapsed mine workings
• Swelling or shrinkage of the subsoil
• Landslip
• Levels of groundwater (the water table), soil and rock sampling
• Drainage and run-off
• Historic use for buried structures, contamination and voids

This is then provided by way of boreholes, window samples, trial pits and then various detailed testing regimes. However, due to cost constraints, the proximity of boreholes is set out further apart and the overall number is reduced, the testing regime may be brought up a level i.e. less onerous to reduce time and cost.

The downside of this is the interpretation of results into the groundworks design. For example, as the ground formation is provided by the nearest borehole as opposed to the location of works, you will have to be more interpretive of the results or make a greater level of assumption. If, once the works start, an issue is found, the lack of accuracy in the ground investigation could open the door for the contractor to make a claim on the basis that he could not have reasonably foreseen the issue based on the information provided.

As there is not a one size fits all approach to the scope of ground investigation, it is a question for the client how far they proceed based on their knowledge of the development site. However, be aware that if you are to scale the scope back too far it almost undermines the principle of carrying it out in the first place.

What happens if there are issues in the ground, is there a standard way to mitigate/value this risk for a developer?

If issues transpire, it depends on what stage of the development they occur i.e. if you have picked up an issue with early site investigations then you can mitigate this through ground remediation, for example before the main works start or allow for dealing with the issue in your design. An example of this could be a development site where historic mine workings have taken place. Here, the level of ground remediation may involve pumping grout into any voids that are found before the main works start.

In terms of ensuring that adequate allowance has been made in your overall development budget to allow for such risks occurring, this will be done by first establishing full effect of a typical risk i.e. water table proves to be different than expected once full GIR carried out. The mitigation then being you will need to alter the length of piles. The cost of this risk event will be the mitigation i.e. fees for the redesign plus the cost of altering the length of the piles.

Equally, if you are aware of an issue before you tender the works then consider how you prepare the contract documents such that you are passing this risk over or selling it to the supply chain. This means that whilst you may receive higher tender returns for the groundworks package, you can draw down your risk allowance as a client to cover this and allow the specialist groundworks contractor to manage the risk.

What are the key things to identify in a ground report?

As well as the information listed above, a ground investigation report is an assessment of:

• Whether a proposed development is suitable or viable dependent on the outcome of the report
• The foundation solution required in terms of type and size
• The best place to locate the foundations across the development area
• If there is any statutory undertaker’s equipment, what is the depth and actual location and will this require diversion

The individual or company certifying the results of the ground investigation will have to demonstrate they have the experience and competence to undertake making such recommendations. They will need to provide evidence they have studied the report and accepted its adequacy.

Conclusion

It is a matter for the developer firstly as to how they want to procure the works as either a design and build or build only. This may be informed by the initial ground/site investigation survey and the resultant risk profile informing them who is best placed to manage this risk. As each development is different, the way forward depends on the nature of the site conditions.

The initial investment in a wide-ranging ground investigation report can be rewarding as the development progresses. For example, value engineered foundation design and more cost-effective tender returns (as the level of confidence in the design is greater and more reflective of actual site conditions) will only be beneficial.

From a contractor’s perspective, they should be aware that under JCT terms they don’t have the contractual route for recovery of additional time and cost for unforeseen ground conditions unless they require alteration of the design and that design is owned by the management contractor or client.

About Dean Suttling

A member of the Royal Institution of Chartered Surveyors, Dean has twenty years of experience in commercial management and quantity surveying, undertaking roles for contractors, clients, and consultants.