Tunnel Business Magazine

OCT 2018

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TUNNELINGONLINE.COM TBM: TUNNEL BUSINESS MAGAZINE // OCTOBER 2018 such a study would also demonstrate that many of those disputes derive from (al- leged or actual) material (more or less in degree) variations between the subsurface conditions actually encountered during construction and the conditions reason- ably expected based upon subsurface data and evaluations available during the design development process, and upon which the final design approach is predi- cated. A closer probe in such a study would reveal that these disputes often arise from the incompatibility, unsuitability and un- constructability of the final design in the context of the subsurface conditions actu- ally encountered during construction. In DBB subsurface projects, construc- tor claims often are asserted on alternate and conjunctive theories of (a) entitlement under contractual DSC provisions and (b) breach of the owner's implied warranty that the final design would be compatible, suitable and constructible in the contrac- tually-indicated subsurface conditions. Courts typically collapse the defective (breach of implied warranty) design claim into a singular contractual DSC claim in circumstances in which those claims are factually and causally intertwined. That said, the duality of this claims approach underscores the important linkage be- tween subsurface conditions and design adequacy risks, and the relevance and im- portance of the DII Factors. Put another way, significant disputes experienced on major subsurface projects often arise out of misalignment and in- compatibility between reasonably antici- pated subsurface conditions and adequacy of the final design approach. This situation has resulted in significant cost overrun and schedule delay exposures for owners in DBB projects. In DBB projects, the contractual alloca- tion (or legal assignment) of these risks to the owner typically is reasonable and rationalized on the bases of the owner's (a) responsibility for subsurface investiga- tion, data evaluation, and report prepara- tion; (b) control over the design develop- ment process; and (c) express or implied responsibility for the adequacy and suit- ability of final design, and its constructa- bility, compatibility and suitability in the anticipated and actually encountered sub- surface conditions. sign- So, what is the relevance of the pre- ceding DBB discussion to DB subsurface projects? That issue and the ensuing analysis reveal many of the complexities and un- certainties in achieving effective and bal- anced risk allocation on DB subsurface projects, and demonstrate that the process of achieving that objective is significantly more challenging than in DBB. Why? In DB there are several interfaces between subsurface conditions and design adequacy risks that account for the com- plexities and challenges in this area: Significantly Varying Risk Allocation Approaches In DB, there are various, significantly different approaches to risk allocations for subsurface conditions and design ad- equacy. The relatively high degree of vari- ability in approaches is due to many rea- sons, including that DB owners often are not constrained by procurement laws and regulations (otherwise governing in DBB) that mandate DSC risk sharing and, as such, those owners have more autonomy and flexibility to utilize (and experiment with) relatively non-conventional risk al- location approaches. For example: • Owners may furnish sufficient or insufficient subsurface data and evaluations. • Owners may disclaim (in whole or in part) the design-builder's right to rely upon owner-furnished subsurface data and evaluations. • Subsurface information and reports may be classified as "Contract Docu- ments," or merely as "reference infor- mation documents," with non-reli- ance and other (more or less specific) disclaimers as to the latter. • The owner-furnished design may be conceptual or preliminary in character; or significantly more de- tailed, mandated, and prescriptive in character. • The "Contract Documents" may or may not include a Geotechnical Data Report ("GDR"), or a Geotechnical Baseline Report ("GBR"), with differ- ing orders of precedence or priority assigned to those reports. • The "Contract Documents" may or may not include a DSC or other provision for subsurface conditions risk sharing. • Under the "Contract Documents," the owner may accept some degree of risk and responsibility for certain portions of the design (e.g., prescrip- tive design) that it furnishes to the de- sign-builder; or, alternatively, elect to transfer to the design-builder all risk and responsibility for the adequacy of the final design. • The "Contract Documents" may con- tain a provision stating that the own- er's acceptance of the design-builder's alternative technical (design) concept may or will alter the otherwise gov- erning risk allocation regime for sub- surface conditions. There are many other approaches, and nuanced variations within the above examples. How each of these issues is approached will independently impact risk allocation effectiveness and balance. Equally important, effective and balanced risk allocation will be impacted by the dy- namics, interactions and interdependen- cies of each of those issues in relation to each other. Absolute Risk Transfer Perspective A DB owner may rationalize absolute risk transfer to the design-builder on the following reasoning: a. Since the owner is contractually dis- claiming any responsibility for accu- racy, suitability or completeness of subsurface data and evaluations that it may furnish, with disclaimers and negation of any reliance rights, the owner should not be responsible for the cost or time consequences of any encountered subsurface conditions, even if materially different from any expectation (even if objectively rea- sonable). b. Since the design-builder is respon- sible for the adequacy of the final design, and the owner has disclaimed any responsibility for the adequacy or suitability of any design (whether conceptual, preliminary or prescrip- tive) that it furnishes, the owner has no design risks or responsibilities. c. Since risk allocation for subsurface conditions and design adequacy is (and should be) influenced and driven by the DII Factors, and given (a) and (b), it would be incongruent and discor- dant for the owner to share risks for subsurface conditions and/or design adequacy with the design-builder. Imprecise Risk Allocation Parameter and Boundary Concerns These concerns arise in the context of a DB owner who wants to share some degree of risk for certain subsurface con- ditions variations but also (reasonably) seeks to establish clear boundaries for this risk allocation. GBRs are a conventional and excellent approach in major DBB sub- surface projects to achieve this objective. However, in DB, the conventional GBR approach may not account (adequately or at all) for the risk allocation implications of tender (or contemplated) final design ap- proach that the design-builder will utilize 2 2 F E AT U R E S T O R Y

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