Geotechnical Baseline Reports, Interpretative Reports, Risk Allocation/Risk Compensation Mechanisms

Risk Allocation / Contract Types
OWNER 100% Turnkey (EPC) Lump Sum (Fixed Price) Lump Sum (Escalation) TYPE OF CONTRACT CONTRACTOR 0%

Target Cost Reimbursable 0% Direct Labour 100%

Risk Averse Clients
 Client wants ‘no’ risk  Contractor takes all risk and is expected to price all
   

risks. Reliance on ‘unforeseen ground conditions’ Clause 12 (or now FIDIC Clause 4.12) Potentially adversarial for the ‘winning’ / successful’ contractor if conditions different Often bespoke conditions or amended standard form. Issues Factual Data (plus requirement that Contractor provides any additional for his purposes)

Risk Sharing Clients
 Issue GIR/GBR
 Costs for different proportions of differing ground  Cost & Time for dealing with different ground.  Conditions of Contract for unforeseen conditions  Dispute Review Board

 Does anybody do this in civil engineering? .Risk Taking Clients  Acceptance of all risk and pay as you go  Price plus extra over for risk events.

Requirements for UG Works Contract Conditions of Contract Specifications Insurance (Risk Sharing) Requirements GDR – Geotechnical Data Report (Factual Report) Ground Reference Conditions (Geotechnical Interpretative Report – GIR) GBR – Geotechnical Baseline Report / Geotechnical Baseline Conditions Risk Register (Insurance is not a mitigation) .

Practices  GBR  GIR  GDR  Risk Compensation  Dispute Resolution  Courts .

“Realistic”? The GBR includes for the mean but also the expected range. If risks are less than baseline or consistent with baseline they belong to the Contractor If risks are more adverse the Owner/ Client accepts the risks and compensates the Contractor accordingly. . A GBR is required to provide a ‘realistic’ interpretation of the anticipated subsurface conditions.Insurance Requirements  A GBR/GIR is an insurance requirement and without     such a document insurance premiums may be higher or a project may require self insurance.

GBR 1997 “Yellow Book” / 2007 “Gold Book .

Contingency ‘eaten up’ .Expert Views  Although a consistent and fair view is required Owner’s are conservative. Risk is ‘overpriced’ and dows not need to be.

. Ground is not described realistically.Conservatism / Protectionism  GBRs do not represent the ground.

If a system isn’t tested how do ‘we’ know if it works. . All ‘claims’ are settled so no legal ruling on GBR.

 If GBR is not ‘realistic’ and does not really reflect the ground this is akin to ‘gambling’ .

. Unrealistic description of range of conditions and what may be expected resulting in ‘risk shifting’ and Contractor taking risk anyway.

 Is the GBR a legal document? .

. The GBR should be ‘straight and ‘honest’. If the GBR is wrong somebody eventually pays.

& a HK perspective .

Ranges of Values .

Baseline Conditions?? .

Results .

Reallocation of Risk .

Risk Compensation  Payment for differing Ground Conditions  Time Compensation  Payment for differing Water Conditions .

Other Mechanisms .

 The estimated quantities for each excavation class given in the Bill of Quantities are not .the predicted and the actual length of each excavation class may differ due to geological conditions encountered in the course of Works.. .an accurate indication of the quantity of work..Payment (Remeasurement)  Measurement and payment for tunnel excavation will be made according to the excavation classes where set out in the Bill of Quantities...

.Extraordinary Geological Occurrence (EGO)  Only exceptionally adverse and unexpected geological conditions and/or an unexpected influx of water severely in excess of the capacity of the facilities envisaged in this overcome the situation and undertake... all the necessary steps to expeditiously resume the tunnel excavation  The EGO provisions do not in any way release the Contractor from his responsibility to excavate with caution .  No EGO will be acknowledged or accepted in the rear zones  If an EGO occurs...leaving no possibility of further advance by the construction methods reasonably provided for by the Contract. the Contractor shall without delay propose a method .. with the approval of the Engineer. .

& Compensation (Time / Cost)  If an EGO occurs. the approved measures shall be reimbursed according to the relevant unit prices and other price determination procedures provided for in the Contract.  The Contractor’s programme shall include allowances for EGO. and shall advise the allowance in the Schedule. The Contractor shall have no claim to an extension of time due to an EGO .

Clause 12 / Clause 4.12 “Experienced Contractor” .

The Contractor shall continue executing the Works .  If the Contractor encounters adverse physical conditions which he considers to have been Unforeseeable. so that they can be inspected by the Engineer. “physical conditions” means natural physical conditions and manmade and other physical obstructions and pollutants. the Contractor shall give notice to the Engineer as soon as practicable.4. which the Contractor encounters at the Site when executing the Works. and shall set out the reasons why the Contractor considers them to be Unforeseeable. including sub-surface and hydrological conditions but excluding climatic conditions.  This notice shall describe the physical conditions.12  In this Sub-Clause.

or artificial obstructions. then the Engineer may grant such time extension as is reasonable .. the Contractor shall encounter physical conditions. such conditions or artificial obstructions could not have been reasonably foreseen by an experienced contractor. which conditions or obstructions could not have been reasonably foreseen by an experienced contractor... the Contractor shall forthwith give written notice thereof to the Engineer and if.such sums as may be reasonable.LTA CoC (Current?)  Adverse Physical Conditions  12. ..2 If. during the execution of the Works. in the opinion of the Engineer. other than weather conditions and effects due to weather conditions on the Site.

The Authority makes no warranty for the accuracy or otherwise of the Report and shall not be responsible for any loss.Information  Geotechnical Data  11. expense or damage suffered by the Contractor arising from the results of geotechnical data made available to the Contractor. The use of the information and the interpretation of it is entirely the Contractor’s responsibility.  .2 The Factual Geotechnical Report is not intended to represent to the Contractor the nature of the soil conditions he will encounter in executing the Works.

Private Developer .

Baseline .

Rates .

Time .

Water .

Recent Example  2000 holes  Several months of study  12 boreholes  Bid in 28 days .

Ground Evaluation Process  Based on data and evaluation  Typically the result of several disciplines  Is it always done? and how much is passed on to ‘save time’ ? Consequences of passing on the chore? .Report.


COST Risk propotional to (1/data) Cost of additiaonl data $ opt Data opt LEVEL OF DATA .

the investigating team.  This is often not a ‘one stop shop’.Report Dependencies  The GBR and GIR are the end product of a process. .  The owner. the contractor.  The quality of both depend on the initial requirements definition and site investigations.  What if geological / geotechnical data/information is not realised?  In any event somebody will do an interpretation. the owner’s consultant.

.Moving On & Quality  What ever mechanism for risk allocation is used how is ‘contract certainty’ maintained.  ISO 9000 requires ‘continuing improvement’ but a ‘baseline’ is fixed.

“Changes” What if GBR is wrong / inappropriate due to data/draughting? How is an EGO incorporated if it happens more than once? What are the consequences if the ground ‘blows the budget’ Changes to baselines and contractual / governance implications Cost / Contract Certainty – ‘wishful thinking’ or ‘stark reality’. ‘hope’. . ‘comfort factor’.

Summary  Geotechnical baselines  Geotechnical Interpretative reports  Contact Conditions  “up front” Payment mechanisms  Being ‘straight’ about ground conditions  Time for process no matter what mechanism is used  What about changing the contract? .