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Differing Site Conditions Claims – Types 1 and 2

Holloway Consulting are construction claim consultants and expert witnesses providing construction contract claim services to all parties in the industry. Please see our INDUSTRY SECTOR page

Over the past 22 years, either Steve Holloway or another staff member have been certified as an expert before arbitration panels and courts in each of the 16 claim types shown at our page on CONSTRUCTION CLAIMS, which should cover every type of construction contract claim.

This page continues our series on the services we provide to our clients as construction claim consultants, in this case, on Differing Site Conditions (DSC) claims, which are often classified as either Type 1 or Type 2.

TYPE 1 Conditions

A Type 1 condition is defined as one in which actual conditions encountered differ materially from those represented within the contract. For instance, the contract boring logs may indicate that the excavation for a foundation will be entirely in overburden. If instead the contractor encounters a substantial quantity of rock excavation, a Type 1 differing site condition was encountered. The key element in establishing a Type 1 DSC hinges on to what extent pre-bid subsurface representations were made.

Conversely, if positive representations made proved inaccurate, the recovery potential is high. Additionally, such representations need not only be affirma­tively expressed in the contract documents. If a logical deduction can be drawn or inferred from the entire contract document, such inference will in fact be construed as a positive representation.

In connection with this “inference” criteria, the issue of quantity variations potentially giving use to a DSC is worthy of note. Although a variation from the owner’s bid estimated quantity is in itself not a DSC, if it materially deviates from what was reasonably foreseeable, a DSC may well exist.

TYPE 2 Conditions

Type 2 differing site conditions are less frequently observed and, therefore, do not have a well developed history of opinion. A Type 2 differing site condition is defined as one in which the actual conditions encountered differ materially from conditions ordinarily encountered and generally recognized to exist in the area. An illustrative example is an instance where a contractor encounters a aquifer in an area not previously known to contain them.

Fundamentally, absent owner representations as to expected subsurface condi­tions, there is an inability to claim a difference. In effect, if nothing is promised, then there can be no difference. In such a case, it is commonly construed that the contract places the risk of uncertainty on the contractor who must absorb any losses resulting from unexpected conditions. In the instance in which the contract does incorporate specific subsurface conditions, the burden of risk shifts.

In an attempt to have contractors rely on such data, owners will often incorporate such data into the contract but disclaim any responsibility for their accuracy. Such exculpatory disclaimers are frequently not given their full force and effect when positive representations are made by the owner intending that such data be used by bidding contractors in formulating their bids. In such cases where representa­tions are made (and assuming unforeseen conditions are encountered which materially differ), a contractor has a high likelihood for recovery.

READ MORE ABOUT DIFFERING SITE CONDITIONS CLAIMS

The Holloway Consulting Group, LLC
Construction Claim Consultants – Construction Claims Experts
12081 W. Alameda Pkwy., #450
Lakewood, CO 80228-2701
Denver Phone: (303) 984-1941
International : (888) 545-0666
Fax: (303) 716-0432

Email: steve.holloway@disputesinconstruction.com
Blog: disputesinconstruction.com
Web: hcgexperts.com

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