{"id":905467,"date":"2026-03-18T15:32:16","date_gmt":"2026-03-18T21:32:16","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=905467"},"modified":"2026-03-18T15:32:18","modified_gmt":"2026-03-18T21:32:18","slug":"construction-risk-differing-site-condition-clauses","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-risk-differing-site-condition-clauses\/","title":{"rendered":"He Chose\u2026Poorly: How Bad DSC Clauses Lead to Project Doom in the Last Crusade of Construction Risk"},"content":{"rendered":"\n

Curtis W. Martin and Cornelius Banta, Jr. | ConsensusDocs<\/a><\/p>\n\n\n\n

\u201c<\/em>We do not follow maps to buried treasure, and X never, ever marks the spot.\u201d <\/em> That\u2019s the advice that Indiana Jones offered in the Last Crusade <\/em>film. But what\u2019s beneath the surface isn\u2019t just important to adventure archaeologists. It has real-world application to our industry, where success depends on the stability of materials below the surface.<\/p>\n\n\n\n

The study of geology and soils has ancient roots. Egyptians relied on soil stability for the pyramids; Rome built a continent-wide roadway system utilizing subgrade preparation techniques; Medieval builders implemented a rudimentary foundation pier system; Henri Gautier studied what is now called the \u201cangle of repose\u201d for French retaining walls in the early 18th<\/sup> Century.<\/p>\n\n\n\n

Through the 19th<\/sup> Century, contractors bore the risk of the stability of their work, and the attendant peril of unforeseen site conditions. But in the early 20th<\/sup> Century, design trades continued to develop increased understanding of soil and underground conditions.  In the 1920\u2019s US federal contracts began employing \u201cdiffering site conditions\u201d clauses, which provided for cost\/time adjustments if subsurface conditions differed from expectations. Industry forms followed the federal policy, and these clauses became almost universally accepted.<\/p>\n\n\n\n

In more recent years, we\u2019ve seen owners shift from form contracts to their own \u201cmanuscript\u201d contract forms. Often these documents exclude differing site conditions recovery, shifting responsibility for site conditions back to the contract.<\/p>\n\n\n\n

This month we look at differing site conditions<\/a>, and how those risks can \u2013 and should be \u2013 apportioned.<\/p>\n\n\n\n

The industry form contracts mentioned above followed similar patterns. Their language differed somewhat, but the basic policies remained the same. Contractors were to rely on construction documents as to underground conditions. This created a level playing field among bidders, allowing them common assumptions about subsurface conditions. And if subsurface conditions were found to be different, costs and time would be added to \u2013 or subtracted from \u2013 the contract on the basis of actual expenses, rather than relying on contingency funds in the bid that might under \u2013 or over \u2013 estimate the actual costs of modifications.<\/p>\n\n\n\n

Judicial decisions supported these differing site conditions clauses, recognizing that they might help owners avoid bid contingency pricing for the unknown financial risk of unfavorable conditions. The US Court of Claims discussed this in a 1970 opinion:[i]<\/a><\/p>\n\n\n\n

The purpose of the changed conditions clause is thus to take at least some of the gamble on subsurface conditions out of bidding. Bidders need not weigh the cost and ease of making their own borings against the risk of encountering an adverse subsurface, and they need not consider how large a contingency should be added to the bid to cover the risk. They will have no windfalls and no disasters. The government benefits from more accurate bidding, without inflation for risk which may not eventuate. It pays for difficult subsurface work only when it is encountered and was not indicated in the logs.<\/p>\n\n\n\n

But these clauses became less common as owners developed their own \u201cmanuscript\u201d contract forms. Today we see contracts without any differing site conditions relief.  Speaking generally, this leaves the contractor with the risk of what\u2019s down below.<\/p>\n\n\n\n

How onerous these owner-friendly forms are varies. Some contracts appear to ameliorate the risk of differing site conditions by allowing bidders to perform their own site borings, which adds to the upfront costs of obtaining work but allows the contractor to manage their risk. However, other \u201cmanuscript\u201d contracts go so far as to declare that the contractor \u201caccepts the site as it is\u201d or requires the contractor to waive any claim for added costs related unknown site conditions. And other clauses prohibit the contractor\u2019s reliance on the geotechnical report and site boring reports; they\u2019re for \u201cinformation only.\u201d<\/p>\n\n\n\n

What\u2019s the right balance? We\u2019ll leave the final call to you. But from our perspective, the owner should bear substantial risk for the project\u2019s site conditions. The owner chose the site and presumably hired licensed engineers and architects to conduct subsurface investigations on the property.  The sufficiency of those pre-construction inspections would seem to be a risk within the owner\u2019s control. And so should the design decisions that were based on those subsurface studies.<\/p>\n\n\n\n

Bid documents allowing contractors to conduct their own investigations might yield more information, at least to the contractors who are willing to bear this expense. But unless there\u2019s a mechanism to share the data, these individual efforts might actually create more problems than they solve. What if different contractors discover different results, due to differing location or frequency of core sampling?  This compounds the risk of an unlevel bidding field. And those contractors who do the field testing will include the cost in their bids. The owner might be better served by devoting those additional costs to improve its own geotechnical evaluation.<\/p>\n\n\n\n

As for the geotechnical report itself, what does \u201cinformation only\u201d mean if the bidders can\u2019t rely on it? Why would the owner expect its design engineers to rely on the geotechnical data and recommendations but instruct the contractors to ignore that data in preparing bids?<\/p>\n\n\n\n

And we would always advise contractors to beware of accepting the adequacy of design or existing conditions unless they had special knowledge or opportunity to perform their own evaluations, which is, in our experience, a rare occurrence.<\/p>\n\n\n\n

The typical differing site conditions clause addresses these issues differently than the clauses found in \u201cmanuscript\u201d contracts. And unlike the newer clauses drafted by owners, it\u2019s time-tested. The language and approach have not changed much over the last 100 years, which lends predictability to a component of a construction project fraught with potential uncertainty.<\/p>\n\n\n\n

The typical differing site conditions clause allows relief if there is material change in project cost or time if two types of different conditions are encountered.<\/p>\n\n\n\n