Introduction1
Construction is an inherently risky business. Each project is unique and delivers a diverse range of infrastructure and buildings. The type of work involved in such projects is different as are the locations where these projects are executed. Furthermore, the contract terms applicable to the project are likely to be specific to that project.
One thing most construction projects have in common is that they are built on the ground and the properties and conditions of that ground are of utmost importance from a construction perspective. If the ground conditions are not known or are not as expected this is a significant risk to the project programme and budget.
The ground condition risk may belong to the contractor or the client. Alternatively, it may be allocated between them. The approach taken will depend primarily on how that risk has been apportioned under the contract, although certain jurisdictions have mandatory statutory provisions which will also need to be considered.2
Whether the actual ground conditions found at the site constitute something different from what should have been foreseen (i.e., foreseeable) can be a simple question of fact, but more often is open to interpretation and therefore can be fertile grounds for dispute between the parties.
In addition to establishing which party bears the risk of the unforeseeable ground condition and whether a risk event has occurred, a further issue to be considered is whether the actual ground conditions found at the site, even if demonstrated to be unforeseeable have, in fact, resulted in an impact on the programme or cost.
This article sets out the approach a contractor should take when considering whether it has a valid claim for unforeseeable soil conditions. The steps the Contractor should follow are:
- identify the unforeseen element: given soil conditions;
- identify the unforeseen element: interpretation of the given soil conditions;
- understand the contractual obligations and whether the unforeseen element can be claimed as unforeseeable; and
- understand the causal link between the unforeseeable element and the impact claimed.
Before considering these steps, this article starts with a background discussion of ground conditions and the use of soil investigation/geotechnical baseline reports. This will provide useful context when considering how best to manage the risks associated with the ground conditions.
What Does 'Grounds in Construction' Mean?
"Grounds in construction" commonly signifies the Earth's solid surface or an area designated for specific purposes. It also denotes the lowest floor of a building, such as 'ground level' or 'ground floor,' and encompasses diverse layers of physical matter.
Soil Types and Properties and Unforeseeable Ground Conditions
There are many different types of soil such as clay, sand, silt, peat, and rock.3 Soil has its own intrinsic properties such as hardness value, bearing capacity, abrasion value, permeability, density, cohesion value, angle of internal friction, and modulus of deformation.The understanding of these terminologies is important because the soil is identified/classified by reference to these properties, and often a dispute relating to soil conditions relates to one (or more) of these soil properties. In addition to the intrinsic properties of the soil, the ground can have extrinsic conditions as well such as underground water, soil contamination, buried debris, and fissures in underground soil. It is also possible that underground objects or services, such as existing/live sewers or electricity cables, are present in the ground, which is another kind of condition. In addition, site conditions can include other conditions such as access, weather, local customs, etc. Therefore, it is vital that a contractor knows the conditions that it is referring to (or relying upon) in its claim for unforeseeable conditions.
Some standard forms of construction contracts, such as FIDIC 2017 (Red4 and Yellow5 Books), refer to 'physical conditions' instead of 'soil conditions'. In the authors' opinion, terms such as physical conditions or site conditions have a wider meaning than soil conditions and include soil conditions, as explained in Humber Oil v Harbour6 case.
In Humber Oil, the contract (standard ICE conditions) included clause 12(1) which provided a relief to the contractor in the case of unforeseeable 'physical condition'. In an unfortunate incident, a jack-up barge, which was held in place by legs resting on the seabed, capsized and was a total loss. Professor John Uff QC, the arbitrator, found that "...taking into account the unprecedented nature of this collapse, there must have been a very unusual combination of soil strength and applied stresses around the base of leg number 2 just before failure occurred".7 Accordingly, the arbitrator concluded that although the condition of the soil was foreseeable, the behaviour of the soil under the applied load was not. Therefore he decided in favour of the contractor. Judge Fox-Andrews QC upheld the arbitrator's award. The employer appealed that '...physical condition is something which is there and stress is not there'. The Court of Appeal disagreed.
Lord Justice Parker stated:8
"A particular condition of soil may, for example, be well known safely to sustain without sheer 1,000 tonnes. If in fact there is a settlement at a load of 300 tonnes what does it show? In my view, surely, that there was an unknown, unforeseeable fault which was plainly a physical condition." (emphasis supplied)
Lord Justice Nourse stated:9
"The principal submission of Mr Dyson [for the employer] is...that a physical condition is something with a material, intransient existence, such as rock or running sand. An applied stress is not a physical condition nor, moreover, is it something which can be encountered... I reject these submissions for the following reasons. First... there is nothing to restrict the application of cl 12(1) to intransient, as distinct from transient, physical conditions... Secondly, while I would agree that an applied stress is not of itself a physical condition, we are not concerned with such a thing in isolation, but with a combination of soil and an applied stress. Third and most significantly... it is impossible to speak of a contractor encountering any form of ground, be it rock, running sand, soil or whatever, without recognising that stress of one degree or another will have to be applied, at any rate notionally, to the ground, which will in turn behave, at any rate notionally, in one way or another; no doubt passively in the case of rock, actively in the case of running sand and perhaps unpredictably in the case of soil. In other words, for the purpose of cl 12(1), you cannot dissociate the nature of ground from an actual or notional application of some degree of stress. Without such an application, you cannot predict how the ground will behave. In the present case I would say that the condition encountered by the contractors was soil which behaved in an unforeseeable manner under the stress which was applied to it, and that that was a physical condition within cl 12(1)." (emphasis supplied)
In summary, knowledge of soil conditions is very important in construction projects. The foundation of a structure or underground works cannot be designed unless and until the conditions of the soil, on which construction is to take place, are known to a design engineer. A misunderstanding of soil conditions can have serious commercial consequences. It is the understanding of the soil conditions upon which a designer bases decisions such as whether a raft foundation is required, or pile foundations are the appropriate solution. Therefore, there must be a proper soil investigation to know, so far as possible, the soil conditions. However, as decided in the Humber Oil case, even the most stringent soil investigations cannot preclude the possibility that the actual soil, at a given point or in a given situation, may behave differently from what might be expected from the soil investigation. Therefore, it is key to properly define what constitutes unforeseeability and where the risk lies if the particular issue at hand is found to be unforeseen.
Soil Investigation
The main purpose of soil exploration or soil investigation is to understand the characteristics and conditions of underground soil. This is usually done by obtaining soil samples at various depths and locations around the intended construction site. In engineering, it is a high-risk approach to start foundation design or construction works without undertaking soil investigation. In this regard, Harding expressed a view in 1947, which is still relevant today:10
"It should be considered as wrong to commence serious construction work without a site investigation, as for a surgeon to operate without an X-ray to guide him. An X-ray cannot show precise conditions, which can only be found on opening the patient, when additional complications may be revealed. Similarly, the conditions existing below ground can be found with certainty only at the points entered."
Technically, a designer can finalise the foundation design and a contractor can start excavation (or even complete a project) without soil investigation. However, it is a significant risk to do so, and the designer/contractor must appreciate the potential consequences of that decision.
To understand the soil conditions, one must obtain soil samples at various depths. Commonly, there are three site investigation techniques: penetration tests, trial pits, and boreholes.11 Using these techniques, soil samples are obtained at a specified point or specified area. Therefore, these techniques will advise the conditions of soil only at the specified points/area. The soil conditions for all other points/areas are assumed based on the findings of the soil investigations and therefore remain uncertain, open to interpretation, and represent a risk.
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Originally published on 14th August 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.