Our latest contract clinic question comes from a main contractor, which has hit unexpected cables and pipes during the groundworks phase of a residential project. Paul Woodley explains the options
The question
We’re a main contractor working on a heritage project in the London suburbs, converting an old warehouse into apartments. While digging into the ground, we discovered pipework and cables that hadn’t come up on any surveys. What do we do about the delay that this is likely to create?
The answer
OK, so you break ground, the surveys looked clean, then the bucket hits a live service that nobody expected. The instinctive response is: “How much delay will this put us in?” But the real question is: “Who carries the risk of what has happened?”
The contract should be your first port of call. Whether you are under JCT, NEC, FIDIC or even a bespoke contract, there will likely be clauses directly related to unforeseen or unforeseeable obstacles. Though there may not.
Here we will examine what some common forms of contract say.
NEC4 ECC
NEC4 contracts include clauses relating to “physical conditions”, which is a broad term. It often encompasses things like ground conditions and artificial obstructions as well as contaminants and pollution.
The wording in NEC4 says that the “experienced contractor” should judge – at the contract date – that the probability of the “physical condition” occurring would be low enough that it would be unreasonable to make allowances for it.
If that is the case, the issue was not weather related and was contained within the site, the risk lies with the employer, and you will have grounds to entitlement to time and money.
JCT
Under JCT forms of contract, there are no broad clauses for unforeseen conditions. As such, entitlement will depend more on whether the employer had provided the correct information. It may also depend on whether there are any specific provisions included within the contract for services by statutory undertakers.
JCT Design & Build 2016 contracts are silent on this issue, so unless the contract is amended to define the specific allocation of risks, then the contractor is regarded as having taken full account of such matters when calculating the contract sum and programme of works.
While the JCT Deign & Build 2024 contract does include for some issues such as unexploded ordinance, asbestos and more, it remains silent on general ground conditions in terms of who bears the risk. As such, the contractor will bear the risk of cable strikes, since it should have taken account of the services in their calculations.
So, what should you do about the delay?
If the situation is going to cause delay or disruption, then you should consider your options depending on the contract type. This is not about how you avoid the delay, but rather how to manage it and ensure nobody gets burned.
Too often, contractors lose entitlement because they simply acted too slowly or did not follow to correct contractual process/procedures.
You may need to accelerate your works to achieve the contractual finish. But if the situation is not covered by the contract and risk is therefore allocated to you as the contractor, this acceleration will have to be voluntary, and you will bear the impact of this entirely.
Whatever you decide to do, the best thing you can do to protect yourself is to maintain an open dialogue with the employer and to record everything. Keep detailed records of your plan and then what actually happened. Capture the data in multiple formats – programmes, daily site diaries, monthly progress reports – this way there is clear defensible evidence showing the effect the situation had on the works if any.
Conclusion
Unidentified services are a common issue even with drawings and GPR surveys.
The type of contract you are on will dictate what your options are regarding the best way to deal with the delay that will likely be caused if you strike cables.
The best course of action would be to keep accurate records of what you had planned to do, and what actually happened both in programme format and daily site diary entries. This should ideally then be reasserted and stated in monthly reports. This should be alongside strong communication with the employer. Keeping accurate records and a strong dialogue are key in situations like these.
If the contract states you must serve a particular notice or document to the employer in events such as these, you should act in a timely manner.
Paul Woodley is a consultant at Decipher – A DeSimone Company.
