Construction Law

Minimize Additional Costs From Differing Site Conditions With This Contract Language featured image

Minimize Additional Costs From Differing Site Conditions With This Contract Language

We typically associate surprises with feelings of amazement and elation — a significant other planning a fancy dinner date or a group of friends popping up with birthday hats and streamers when the lights come on. Surprises in construction work, on the other hand, are usually accompanied by feelings of dread or gloominess. Why? Unanticipated events in construction almost always lead to an increase in costs and a dispute over who will assume responsibility for these changed conditions.

Depending on the language of your contract, you could be bearing the risk for any unexpected costs or delays that arise as a result of differing site conditions. That’s why, in this article, we’ll review how you can evaluate your risk for encountering differing site conditions, account for this risk in your bid, and protect yourself with the appropriate contract provision. If you need assistance from an experienced West Palm construction attorney who understands the intricacies of contract law and who can help you draft a strong contract, request a consultation with Cotney Attorneys & Consultants. 

Related: Hidden Conditions: Dealing With the Unexpected

Evaluate and Account for Risk

Deciding who should assume responsibility for differing site conditions is never an easy battle. In the contractor’s view, he or she should not have to compensate for an error or omission in the project’s plans that ends up leading to additional costs. Owners, on the other hand, think that the contractor should have been aware of the situation based on their thorough inspection of the site. Without a clause in your contract dictating otherwise, a court of law will typically side with the owner, so long as they did not withhold information regarding the project or jobsite. Contractors are generally responsible for any change of conditions that could have been reasonably found during an inspection of the site prior to bidding. 

This begs the question of how contractors can protect themselves from having to assume the risk of unanticipated site conditions and becoming vulnerable to additional costs. Our recommendation is to ask yourself the following questions before bidding on an project, especially ones where subsurface conditions may become an issue:

  • Will the contract for this project include a clause for differing site conditions?
  • Are any disclaimers being made about data provided regarding the site conditions? 
  • Do you have any reason to suspect adverse conditions below the surface of the soil?
  • Is there an opportunity for you to conduct a pre-bid investigation of the jobsite?

Having this information will allow you to have a better understanding of your risk of encountering a differing site condition and account for this risk in your bid. 

Related: The Differing Site Conditions Clause

Protect Yourself With a Differing Site Conditions Clause (DSC)

To minimize your exposure to additional costs and protect your construction business, it’s crucial that you have some type of site conditions clause in your contract, such as a differing site conditions clause. While they may be optional in private contracting, these clauses are actually required in federal contracts or contracts that received federal funds. Two types of differing site conditions are recognized under a differing site conditions clause: Type I and Type II. Type I differing site conditions are conditions that a contractor encounters that differ materially from the conditions indicated in the contract, whereas Type II differing site conditions are conditions that differ materially from conditions a contractor would typically expect to encounter while performing work of that type. 

A differing site condition clause shifts the risk from the contractor and has the capacity to entitle the contractor to more time or money upon the discovery of a differing site condition. Owners agree to a differing site condition clause when they understand the potential for site conditions to significantly impact project budget or schedule and understand that they may save money by accepting some of the risk. If you are interested in drafting a strong contract that can guarantee the responsible party will handle their corresponding obligation, request the assistance of a West Palm construction attorney with Cotney Attorneys & Consultants. 

If you would like to speak with a West Palm construction dispute attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.