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%

Admeasurement
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

Risk Taking Clients

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

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

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. A GBR is required to provide a realistic interpretation of the anticipated subsurface conditions. 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.

GBR 1997 Yellow Book / 2007 Gold Book

Expert Views
Although a consistent and fair view is required

Owners are conservative. Risk is overpriced and dows not need to be. Contingency eaten up

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

described realistically.

 All claims are settled so no legal ruling on GBR. If a

system isnt tested how do we know if it works.

 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

Payment (Remeasurement)
Measurement and payment for tunnel excavation

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

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 Specification, ...leaving no possibility of further advance by the construction methods reasonably provided for by the Contract... No EGO will be acknowledged or accepted in the rear zones If an EGO occurs, the Contractor shall without delay propose a method ...to overcome the situation and undertake, with the approval of the Engineer, 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

& 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 Contractors 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

4.12
In this Sub-Clause, physical conditions means natural physical

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

LTA CoC (Current?)

Adverse Physical Conditions 12.2 If, during the execution of the Works, the Contractor

shall encounter physical conditions, other than weather conditions and effects due to weather conditions on the Site, or artificial obstructions, 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, in the opinion of the Engineer, such conditions or artificial obstructions could not have been reasonably foreseen by an experienced contractor, then the Engineer may grant such time extension as is reasonable ...such sums as may be reasonable...

Information
Geotechnical Data
11.2 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. The use of the information and the interpretation of it is entirely the Contractors responsibility. The Authority makes no warranty for the accuracy or otherwise of the Report and shall not be responsible for any loss, expense or damage suffered by the Contractor arising from the results of geotechnical data made available to the Contractor.

Private Developer

Baseline

Rates

Time

Water

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

Report, 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?

GEOTECHNICAL INTERPRETATIVE REPORT

GEOTECHNICAL BASELINE REPORT

OUTPUTS

DESIGN CONSIDERATIONS

CONSTRUCTION / RISK CONSIDERATIONS

PROCESS

INTERPRETATION

SITE INVESTIGATION DATA SITE INVESTIGATION EXECUTION INPUTS SITE INVESTIGATION PROCUREMENT SITE INVESTIGATION DESIGN DESIGN / CONSTRUCTION REQUIREMENTS

COST Risk propotional to (1/data)

Cost of additiaonl data $ opt

Data opt

LEVEL OF DATA

Report Dependencies
The GBR and GIR are the end product of a process.
The quality of both depend on the initial requirements

definition and site investigations. This is often not a one stop shop. What if geological / geotechnical data/information is not realised? In any event somebody will do an interpretation. The owner, the owners consultant, the contractor, the investigating team.

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, comfort factor, hope.

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?